Sitting of 13 March 1985

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  LERWICK HARBOUR ORDER CONFIRMATION BILL
  Considered; to be read the Third time.
Oral Answers to Questions
  SCOTLAND

    East Fife Regional Road
    Mr. Willie W. Hamiltonasked the Secretary of State for Scotland what steps he intends to take to expedite progress on the construction of the East Fife regional road; and if he will make a statement.
    Mr. Michael Ancram: Every effort is being made to complete the East Fife regional road as quickly as possible. A contract for phase 2 has just been awarded and, provided funds are available, the remaining two phases will start as soon as the necessary statutory procedures are completed.
    Mr. Hamilton: "Provided funds are available" is an ominous phrase. Will stages 3 and 4 be combined in one contract? How many objections are outstanding? What efforts is the Department making to satisfy those objections to avoid the possibility of holding a public inquiry, which will delay the project?
    Mr. Ancram: Whether the two phases can go together depends partly on the availability of resources and partly on the statutory procedures being completed in both cases. There are seven unresolved objections to the draft road orders which were published last April. We are preparing draft compulsory purchase orders, which we hope will be published in the summer. If objections to those orders are lodged and not withdrawn, a public inquiry will obviously be required. As usual, my Department is making every effort to ensure that if the objections are resolvable without an inquiry, that will be done.
    Mr. Hirst: Does my hon. Friend find it a curious contradiction that the Labour party in Fife should be in favour of a road which relieves local communities of traffic, whereas the labour party in Edinburgh is blindly and dogmatically opposed to the western relief road, which would bring considerable benefit to the whole of the western sector in Edinburgh?
    Mr. Ancram: Obviously I cannot comment on the Edinburgh relief road. I am sure that the hon. Member for
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    Fife, Central (Mr. Hamilton) is aware that there has been a great deal of expenditure on roads in Fife. In the five years up to March 1984, £16·4 million was spent on trunk roads and £21 million was spent on local roads.
    Mr. Gourlay: Is the hon. Gentleman aware that regional grants are a major attraction for industries corning to Fife? In view of the abolition of regional development grant assistance to Fife, will the hon. Gentleman do everything possible to expedite the construction of the East Fife regional road? Assuming that there are no objections to and no public inquiry into the compulsory purchase orders, will the hon. Gentleman assure us that the Department will take every opportunity to expedite the construction of the road?
    Mr. Ancram: I hope that the hon. Gentleman is aware from what I have said that my Department and I regard this as an important road. Subject to the procedures being completed and to the availability of resources, the road will be completed as soon as possible.

    Glenochil Young Offenders Centre
    Mr. Maclennanasked the Secretary of State for Scotland if he will make a statement about the future of the Glenochil young offenders centre.
    Mr. Ancram: I have no plans at present to change the regimes of the young offenders institution and detention centre at Glenochil. However, the best use of all penal establishments is kept under regular review.
    Mr. Maclennan: Has the Under-Secretary of State noticed that during the 12 years before 1981 there were no deaths at the Glenochil complex, but that since then there have been six deaths? Does that not suggest that, under this Government, shocks may be not only sharp and short, but terminal?
    Mr. Ancram: I am surprised at the hon. Gentleman's comment, because I believe that he was a member of the Labour Administration between 1974 and 1979. I must say to the hon. Gentleman, if he does not know already, that the regime at the Glenochil detention centre has not changed since 1960. It was acceptable then and, in our view, it is still acceptable. Of course, I am concerned about any deaths at penal establishments, and especially the six deaths at Glenochil since 1976. As we know, they are the subject of inquiry and cannot be commented upon. None of the first five deaths was attributed to the management or regime at Glenochil by the fatal accident inquiry.
    Lord James Douglas-Hamilton: What is the percentage success rate of those who come out of Glenochil and do not return to the recesses of the Scottish penal system? Does my hon. Friend envisage an improvement in those figures in the future?
    Mr. Ancram: For obvious reasons, the success figures are not recorded centrally. The whole House must understand that young offenders' institutions and detention centres exist to provide an opportunity for a change of attitude in the persons who are there. Whether they are changed depends on the company that they keep afterwards and their character.
    Mr. O'Neill: Does the Minister agree that the statement that was made yesterday by his hon. and learned

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    Friend the Solicitor-General for Scotland is helpful, in so far as it goes, in changing sentencing policy? Many of us have asked for that, because the change that has taken place in the public's attitude as a result of the inquiries shows that there is nothing fundamentally wrong with the regime. The problem is that in many instances the wrong people are being sent to the institution. Secondly, the information that the Minister gave me yesterday and his response to the last question show that he is completely incapable of justifying the efficacy of the short, sharp shock treatment on any statistical evidence. If he cannot provide that evidence, he should take steps to end that form of treatment.
    Mr. Ancram: On the latter part of the hon. Gentleman's question, Her Majesty's Inspector of Prisons described the regime as "positive and purposeful." I endorse that. I thank the hon. Gentleman for what he said about the regime.
    The announcement made yesterday by my hon. and learned Friend the Solicitor-General for Scotland was, I believe, logical. If we are to have a system that relies on the short, sharp, shock, plainly the shock element is diminished by someone returning for a second time. That can have a disruptive influence on the good work of the institution. I thank the hon. Gentleman for the welcome that he gave to the decision that we announced.

    Elderly Persons (Problems)
    Mr. MacKenzieasked the Secretary of State for Scotland if he will cause a survey to be conducted about the problems of elderly mentally confused people in Scotland and thereafter publish his findings.
    The Secretary of State for Scotland (Mr. George Younger): The needs of this group have not substantially changed since the Timbury report on services for the elderly with mental disability was published, and I see no need at present for a further survey.
    Mr. MacKenzie: Does the Secretary of State accept that the problem of senile dementia in Scotland is growing, and that all those old people and their families are in "a Catch 22 situation"? They cannot be taken into old folks' homes because they are too confused, and they cannot go into hospitals because there are insufficient beds. Will he ensure that more beds are made available for people in that condition, and will he provide them as fast as he can?
    Mr. Younger: I well appreciate the right hon. Gentleman's anxiety about this matter, which worries every Member of Parliament. We have made considerable progress recently towards implementing the recommendations of the Timbury report. It recommended that by 1991 we should have 7,200 hospital beds for that group of patients. We have 5,000 now, and by 1987 there should be 6,000. We are well on the way to implementing the recommendations. I shall do what I can to ensure that the health boards maintain their priorities in this important matter.
    Mrs. McCurley: Will my right hon. Friend encourage the development of private nursing home accommodation for the frail, the confused and the elderly? Will he also ensure that the nursing home regulations, which are in some doubt at the moment, are tightened up?
    Mr. Younger: I well appreciate what my hon. Friend says. I, of course, encourage private provision, provided
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    that it is up to acceptable standards, and we shall do all that we can to ensure that it is. As I have said, we continually impress on the health boards the need to put Health Service provision at the top of their priority lists.
    Mr. Foulkes: Does the Secretary of State welcome the setting up of Scottish Action on Dementia? Will he take up with the chairman of the Ayrshire and Arran health board the shortfall in places to deal with dementia so that we see some action towards the aims and objectives of the Timbury report in the area which he and I represent?
    Mr. Younger: Yes, Sir. I agree with the hon. Gentleman about that. We have had a long-standing shortage of this accommodation in the part of the country that we represent. The health board has the matter at the top of its priorities, and I hope that it will be able to take good action soon.
    Sir Hector Monro: Will my right hon. Friend do all that he can to maintain capital expenditure on improving hospitals for the mentally ill, especially for the young mentally ill, so that they can be treated as near to their homes as possible?
    Mr. Younger: I agree with the aims that my hon. Friend has outlined. I am glad to say that the programme for capital building in hospitals has been kept at a steady, high level during the past few years. I hope that we can keep it that way.
    Mr. Ewing: Will the Secretary of State reject the poor house mentality of the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley)? Will he tell the House how many of the 5,000 beds that are now available for the treatment of senile dementia were planned by this Conservative Administration, and how many were planned by the Labour Government? When will the Government be in a position to tell us about some new building programme to relieve this serious problem?
    Mr. Younger: If the hon. Gentleman wants figures for the dates when the various parts if the programme were put into effect, I shall gladly answer a question if he tables one.
    The hon. Gentleman did not strengthen his case by his wholly unwarranted interpretation of the question by my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley), which bore no resemblance to what she asked. My hon. Friend expressed the hope that the private sector could also help to deal with these people who need help. If the hon. Gentleman cannot welcome that, he is not worthy of the Front Bench.

    Scottish Trades Union Congress
    James Hamiltonasked the Secretary of State for Scotland when he last met the general secretary of the Scottish Trades Union Congress; and what matters were discussed.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): My right hon. Friend and I meet the STUC from time to time to discuss a wide range of issues. My right hon. Friend last met the STUC on 25 January, when the coal dispute was discussed. The general secretary was not present on that occasion. I met representatives of the STUC most recently on 1 February to discuss education and training matters.
    Mr. Hamilton: Will the hon. Gentleman and his right hon. Friend again seek a meeting with the general secretary of the STUC to discuss the intolerable unemployment situation? Will they also discuss the rating revaluation that is taking place, which will have an adverse effect on businesses and further aggravate unemployment? Will they also discuss—
    Mr. Speaker: Order. Two questions are enough.
    Mr. Hamilton: Will they also discuss the teachers' pay claim—
    Mr. Speaker: Order. That is being a bit greedy.
    Mr. Stewart: I cannot promise the hon. Gentleman that my right hon. Friend will have a meeting with such a prolonged agenda. My right hon. Friend is always willing to meet the general secretary of the STUC, when it is appropriate. I must point out that manufacturing industry benefits from the revaluation in Scotland. In relation to the hon. Gentleman's point about unemployment, I hope that the STUC will compare Britain's performance with that of the United States. During the past decade, employment in the United States increased by 18·5 million and real weekly earnings fell. During the same period the United Kingdom lost more than 1 million jobs and real weekly earnings rose by 19 per cent. There is a lesson for trade unions in that.
    Mr. Malone: When my hon. Friend next meets representatives of the STUC, will he remind them of the productivity deal that was entered into about a year ago at British Shipbuilders, which has resulted in efficiency in some Scottish yards being increased by 25 to 30 per cent.? Will he encourage the STUC to adopt similar practices in other industries, because that is the real way to protect jobs?
    Mr. Stewart: My hon. Friend is right. The real way to protect jobs is to improve productivity and to meet customers' needs. The recent orders, such as the outstanding order won by Govan Shipbuilders, are a tribute to the responsiveness of many trade unionists to the needs of a competitive economy.
    Mr. Buchan: If the Minister does not propose to meet the STUC early to discuss the mining dispute, and especially the behaviour of Mr. Wheeler of the NCB, will he meet instead the two chief constables who have called for an end to this action? Is it not disgraceful that they find the upholding of law and order on the beat infinitely more progressive than do their masters at the Scottish Office?
    Mr. Stewart: There were 900 convictions during the coal strike and fewer than 200 dismissals. The board has considered each case on its merits. I deplore the personal attacks on Mr. Wheeler by Opposition Members. It is about the only thing that unites them on the coal strike.
    Mr. Bill Walker: When my hon. Friend next meets the general secretary of the STUC, will he bring to his attention the lessons that came out of the coal strike, especially with regard to trade union and non-trade union workers who worked together to protect their jobs in their industries? Will he especially draw attention to the fact that at Ravenscraig and elsewhere productivity increased?
    Mr. Stewart: Yes, Sir. The country owes an enormous debt to the miners who continued to work, despite violence and intimidation, throughout the strike. I join my hon.
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    Friend in praising the efforts of the management and work force at Ravenscraig to keep it going, despite the coal strike and what the STUC said about it on several occasions.
    Mr. Home Robertson: Has the Minister seen representations that have been made by the STUC about the provocative and vindictive attitude of the National Coal Board's management in Scotland? Is he aware that 17 of my constituents were tried for what even the police described as minor picket line offences, but they have now been sacked by my constituent, Mr. Albert Wheeler? Is that in accordance with Government policy?
    Mr. Stewart: The hon. Gentleman seems to have a wide variety of constituents. I simply point out that any miner who has been sacked and who feels aggrieved can have recourse to an industrial tribunal.
    Mr. John Mark Taylor: Will my hon. Friend comment upon the TUC in Scotland mitigating the damage caused to the Scottish coal industry by the NUM, and also condemn the recent violence to the president of the Scottish NUM?
    Mr. Stewart: I join my hon. Friend in condemning the recent violent attack on Mr. McGahey, who is a constituent of my hon. Friend the Member for Edinburgh, South (Mr. Ancram). I hope that the STUC and everyone else will now concentrate on rebuilding the coal industry, to create a competitive industry for the future.
    Mr. Norman Hogg: Is the Minister aware that his view of Mr. Wheeler's attitude is very different from what has been widely reported in the press in recent weeks? Will he, as a matter of urgency, meet the STUC and Church leaders in Scotland, who are seeking an amnesty for those miners who have lost their jobs?
    Mr. Stewart: The National Coal Board and the Government have made it clear that a total amnesty is out of the question. We must bear in mind the violence and intimidation that went on during the coal strike. That is what Opposition Members too quickly tend to forget.
    Mr. Andy Stewart: Does my hon. Friend agree that miners, whether they work in Scotland, England or Wales, should be afforded the protection of the law and that those who break it should suffer the consequences?
    Mr. Stewart: I entirely agree with my hon. Friend. I repeat that the board has made it clear in Scotland, as in the rest of the country, that each case was considered on its merits.
    Mr. Douglas: Will the Parliamentary Under-Secretary of State reconsider what he said about the National Coal Board examining each case in Scotland on its merits? Mr. Wheeler is on record as saying that he will do no such thing. In his discussions with the STUC and the NUM in Scotland, will the Minister persuade the NCB to examine each case on its merits and to enter as expeditiously as possible into discussions with the NUM so that there may be a return to good industrial relations in Scotland, for the benefit of the mining industry and the Scottish economy?
    Mr. Stewart: I have already said that the NCB has examined each case on its merits. I point out to the hon. Member that, although there were 900 convictions during the strike, there have been fewer than 200 dismissals.
    Mr. Henderson: When my hon. Friend meets the STUC, will he put to it the view that strikes never do

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    anybody any good? That was particularly marked during the recent coal strike, which has had disastrous consequences for the formerly economic Frances and Seafield collieries in Fife.
    Mr. Stewart: My hon. Friend is absolutely right. I believe that the Opposition are seeking to divert attention from the real issues that must be faced—the damage that has been done to the coal industry and the need for it to become efficient and competitive. If the industry can achieve those aims, it will have a very good future.
    Mr. Martin: The Minister will no doubt know that the STUC is very concerned about the future of the British Rail works at Springburn, where about 1,500 men and women are employed. The proposal is that the work force should be reduced to 500. That means that no longer will there be any railway workshop capacity in Scotland, let alone at Springburn. Will the Minister give an assurance that he will fight for the retention of that workshop?
    Mr. Stewart: The House knows of the hon. Gentleman's concern, which he has expressed on a number of occasions, about BREL at Springburn. However, that is a matter for British Rail. Because of changed circumstances, it has had to make this announcement.
    Sir Hector Monro: Will my hon. Friend talk to the STUC about employment and confirm that last month there were 342,000 more people in work in the United Kingdom than there were 12 months ago? Is that increase reflected in Scotland?
    Mr. Stewart: The short answer to my hon. Friend's question is yes. Total employment up to September 1984 was rising in Scotland, as it was rising in the United Kingdom. There are a number of particularly encouraging signs in the service, oil-related, electronics and manufacturing industries. The last CBI survey was much more encouraging about employment trends than has been the case for a number of years.
    Mr. Dewar: Does the Minister accept that justice has to be seen to be done in the miners' dispute? It is no good the Minister saying that there has been an individual review, when many of us know that miners who were involved in very minor incidents, which sometimes resulted only in admonitions, have lost their jobs and been thrown out of the industry after many years of blameless service. Is the Minister aware that Mr. Wheeler has said that all those who have been dismissed are guilty of serious crimes against fellow workers or NCB property? Will he have discussions with the Solicitor-General for Scotland and confirm from his Department's prosecution records that that is just not true? In view of that, will the hon. Gentleman tell the NCB that it would be quite monstrous if there were not to be individual reviews based upon the circumstances of cases of the kind that have taken place in many other parts of the country? Will the Minister at least redeem himself by joining the Churches and the chief constables in making that point forcefully and removing what is rapidly becoming a public scandal about justice in Scotland?
    Mr. Stewart: The reasons for the dismissals were set out very fully by Mr. Wheeler in his letter to The Scotsman of 12 March. The NCB completely repudiates the charges of petty vindictiveness that have been put to it. I repeat,
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    if an individual feels that he has a grievance, he has, as has any other employee who has been dismissed, the right of appeal to an industrial tribunal.

    Highlands and Islands (Policing)
    Mr. Kennedyasked the Secretary of State for Scotland what representations he has received over the projected level of policing by the Northern Constabulary within the Highlands and Islands; and if he will make a statement.
    Mr. Ancram: I have had representations from hon. Members whose constituencies are in the northern police area and from many local organisations and individuals. I have also corresponded with the chairman of the joint police committee. The decision to reduce the police budget for 1985–86 was made by the joint police committee, and flowed from limitations placed by Highland regional council on its contribution to policing costs.
    Mr. Kennedy: When will the Minister live up to his responsibility and stop trying to mislead the House on this issue? The limitations on the budget are a direct result of Scottish Office guidelines, and Highland regional council has budgeted within those guidelines. Is the Minister aware that the outcome is the proposed closure of 33 police stations in the Highlands and Islands, including 17 in my constituency? In view of that, does the Minister think that his is the party of law and order in the Highlands any more?
    Mr. Ancram: Only one guideline has been given to the Highland regional council, and that requires it to make an overall reduction of 1 per cent. in its expenditure in real terms. I find its decision to reduce the contribution to policing costs by 6·5 per cent. surprising, but it is one that it is entitled to take. In view of the strictures that the hon. Gentleman made against me and my right hon. Friend the Secretary of State, I point out that were we to tell local authorities what to spend on individual services, we would rightly be accused of destroying the fundamental principle of local government, which is that councils are entitled to decide their own priorities.

    Borders Region (Revaluation)
    Mr. Kirkwoodasked the Secretary of State for Scotland what representations he has received about the effects of the proposed rating revaluation on commercial ratepayers in the Borders region.
    Mr. Ancram: I have received several representations to the effect that the values fixed for commercial property in the Borders are too high. Aggrieved ratepayers may appeal to the local valuation appeal committee or to the courts. In Scotland as a whole, I understand that the average multiplier for commercial property is slightly below that for all property. It follows that commercial subjects overall should, in the coming year, be paying a smaller proportion than in the past of the rate bill.
    Mr. Kirkwood: Is the Under-Secretary of State aware that commercial ratepayers in the Borders region are finding it difficult to reconcile what the Secretary of State for Scotland said to me only last Thursday—that across the country commercial rates had fallen by 3·2 per cent.—with the fact that the regional assessor in the Borders

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    claims that the increase has been 41 per cent., and that some of the increases are coming through at 160 per cent.? The hon. Gentleman knows the area as well as I do, and knows that commercial increases of that magnitude would require a far bigger upturn in economic activity than has taken place in the Borders area. Why has this happened? Can the Minister give us a promise of some relief for commercial ratepayers in the Borders area?
    Mr. Ancram: The hon. Gentleman asked for an explanation why this has taken place, and until we see the full effects of revaluation it will not be possible to judge. It may be that in previous revaluations the valuations were set lower than the average. I know that my right hon. Friend the Secretary of State has already told the hon. Gentleman that revaluations are about gainers and losers, because they balance the rating burden. Within his area, it is worth noting that there are concerns that will benefit from revaluation.
    Mr. Kirkwood: I have not found any.
    Mr. Ancram: I suggest that the hon. Gentleman goes to the Edinburgh Wool Mill in Jedburgh, which will have a rate reduction of 20 per cent., or Moffat Woollens in Jedburgh, which will have a rate reduction of 25 per cent., or the Kelso ice rink, which he knows well, which will have a reduction of 10 per cent.
    Mr. Forth: In view of the widespread concern expressed about commercial rates and—
    Mr. Speaker: Order. The question is about commercial rates in the Borders area.
    Mr. Forth: In view of the widespread concern expressed about commercial rates in the Borders, and the concern about domestic rates, as expressed by my father in Glasgow recently, will my hon. Friend take the lead in rating—[Interruption.]—
    Mr. Speaker: Order. English Members have some rights as well.
    Mr. Forth: Will my hon. Friend now take the lead in encouraging a thorough reform of the rating system in Scotland, to set a model for the rest of the United Kingdom?
    Mr. Ancram: I am involved, as I think hon. Members know, in a Government review, with my English colleagues, of the system of local government finance. At this stage, obviously, I would not want to pre-empt the considerations within that review. I am concerned about the levels of valuation increases for commercial enterprises. If those who have received them think that they are unfair, they must realise that they have a right of appeal.
    As to domestic ratepayers, of course we have given a large measure of relief to the domestic ratepayers. That was announced the other day.
    Mr. Allen Adams: Will the Minister take a little trip to Inchinnan and speak to the former Conservative group leader of Paisley town council, one Mr. James Neal.—[Interruption.]
    Mr. Speaker: Order. Is that in the Borders? [HON. MEMBERS: "No."] The hon. Gentleman must relate his question to the Borders.
    Mr. Forth: Will my hon. Friend now take the lead in encouraging a thorough reform of the rating system in Scotland, to set a model for the rest of the United Kingdom?
    Mr. Ancram: I am involved, as I think hon. Members know, in a Government review, with my English colleagues, of the system of local government finance. At this stage, obviously, I would not want to pre-empt the considerations within that review. I am concerned about the levels of valuation increases for commercial enterprises. If those who have received them think that they are unfair, they must realise that they have a right of appeal.
    As to domestic ratepayers, of course we have given a large measure of relief to the domestic ratepayers. That was announced the other day.
    Mr. Allen Adams: Will the Minister take a little trip to Inchinnan and speak to the former Conservative group leader of Paisley town council, one Mr. James Neal—[Interruption.]
    Mr. Speaker: Order. Is that in the Borders? [HON. MEMBERS: "No."] I think that the hon. Gentleman must relate his question to the Borders.
    Mr. Adams: It is wholly relevant to rating and to revaluation.
    Mr. Speaker: The question concerns rating in the Borders.
    Mr. Maclennan: Is the Minister aware that commercial ratepayers in the Borders are more sharply aware than anybody else in Scotland of the unfairness of the revaluation going ahead on the Scottish side of the Borders, while nothing is being done in England?
    Mr. Ancram: I am sure that ratepayers in the Borders, commercial or otherwise, are as aware as anybody else that in Scotland, by statute, we have always had regular revaluations and, indeed, both sides of the House, if I may say so, have taken some pride in those revaluations, because we believe that over a period of time they ensure that there is fairness in the way that the rate burden is apportioned. I think that it is a matter for some surprise that the hon. Gentleman, who was a member of the Government who presided over a revaluation in Scotland in 1978 when none occurred in England, should take the line that he does now.
    Mr. Craigen: Can the hard-pressed commercial ratepayers in the Borders give any credence to the rumour that the Prime Minister is well disposed to taking commercial and industrial rating out of the system altogether?
    Mr. Ancram: The hon. Gentleman has heard what I have said about the review that is taking place. I am sure he will understand that I do not want to pre-empt the consideration of that review.

    Teachers (Pay)
    Mr. Robin Cookasked the Secretary of State for Scotland if he will meet the general secretary of the Educational Institute of Scotland to discuss teachers' pay.
    Mrs. McCurleyasked the Secretary of State for Scotland what progress has been made in settling the teachers' pay dispute.
    Mr. Canavanasked the Secretary of State for Scotland what steps he is taking to find a fair solution to the teachers' dispute.
    Mr. Younger: The general secretary of the Educational Institute of Scotland was present when I met representatives of the Scottish joint negotiating committee for teaching staff in school education, at their request, on 28 January and 15 February 1985. I have not been approached by him for a separate meeting.
    Despite these meetings with me and clarification of my position in writing, the teachers' side of the Scottish joint negotiating committee for teaching staff in school education continues to oppose a review of pay and conditions of service within that committee. I wrote to the teachers' side on 28 February noting its decision with regret. I, of course, remain willing to meet it again if it wishes to revive the idea of such a review. Meanwhile, I am keeping in close touch with the Scottish Examination Board and with the education authorities in order to ensure that as much as possible is done to safeguard the interests of pupils affected by the present industrial action, especially those in examination years.
    Mr. Cook: Will the Secretary of State accept that at a meeting of over 100 teachers in my constituency I was informed of a teacher who now qualifies for a rate rebate, of another who now moonlights driving a taxi and of a qualified science teacher who has left to go to work in a bank? Is he prepared to defend the level of professional pay that gives rise to those cases? Can he tell the House how he hopes to get the CSE assessments this year without the co-operation of teachers, or what he expects fourth year pupils to do next year when there are no standard grade materials for them? Does he not appreciate that all these problems would vanish overnight if he stopped running away from an outside opinion and accepted the reasonable, moderate, demand of teachers for an independent review of their pay?
    Mr. Younger: Like many of us, the hon. Gentleman will have attended meetings at which people will have put statistics before him. He raises matters which are strongly felt, but they are best put in the normal negotiating process which was set up precisely to look at pay and conditions of service. Even at this stage I urge teachers to accept that that is the way to deal with what they see as great grievances which they want sorted out. I am in close consultation with the education authorities and the Scottish Examination Board to ensure that every possible step is taken to see that examinations go ahead and that pupils receive proper recognition for their work. I understand that some education authorities are now prepared to take action against teachers who refuse to carry out instructions on the preparation of pupils for external examinations.
    Mrs. McCurley: Does my right hon. Friend agree that the refusal of teachers to negotiate means that they might be missing out on the kind of financial redistribution that has happened recently, which has helped the hard-pressed ratepayer?
    Mr. Younger: I appreciate my hon. Friend's point, but I have confined myself in the teachers' dispute to encouraging teachers to use the machinery that was set up precisely for the purpose of looking into the sort of grievances that they have. I hope that they will do that.
    Mr. Canavan: How can the Secretary of State possibly justify a situation in which a young person can spend three or four years studying hard at university, followed by another year at a college of education, only to find that a teacher is paid £138 a week less than a policeman? Will the right hon. Gentleman accept full responsibility for the current crisis in Scottish education and the chaos that exists in many Scottish schools? Does he appreciate that it is up to him to help find a solution by agreeing to the legitimate demand for an independent pay review?
    Mr. Younger: The hon. Gentleman might find, if he really looks into the matter, that it is extraordinarily difficult to compare the totally different jobs of teachers and policemen. Everything to do with their conditions, times and type of work is utterly different. The crisis in the schools to which the hon. Gentleman refers is due to the fact that teachers have decided to use this sort of guerrilla action, to the great deterioration of the chances of their pupils, instead of using the machinery that was set up exactly for the purpose of trying to sort out their grievances.
    Mr. Michael Forsyth: Has my right hon. Friend noticed that teachers seldom go on strike on Mondays and Fridays? Apparently they get paid for two days' work on Mondays and Fridays, so that teachers who work only two days a week get paid for four days. Will he look into the matter because, if that is the case, it is a disgraceful state of affairs?
    Mr. Younger: I appreciate the point that my hon. Friend makes. I understand that all sorts of variations on the tune can be played, including allowing for holidays and the like. However, none of that should blind us to the fact that the extreme action of taking labour away from the schools when children are facing examinations—perhaps their only chance of taking those examinations—is a most serious step to take and is quite unjustified by any grievances when machinery exists for dealing with such matters.
    Mr. Wilson: Is it not a fact that the teachers do not believe that the Secretary of State has, or is prepared to find, the necessary resources to meet their claim under the negotiating procedure to which he has referred, particularly as he has turned down the request for an independent pay review? Is the right hon. Gentleman cramped by the effects of the Barnett formula? If so, will he ask the Treasury for more money so that the matter may be settled swiftly, in view of the harm that is being done to the education of many children?
    Mr. Younger: I appreciate the point that the hon. Gentleman makes in the last part of that supplementary question, and I am sure that he will use all his influence, at least in his area, to persuade teachers that this is not the right way to pursue their concerns. I have made it clear in my offer to the teachers that if they will go into negotiations and produce a package which includes pay and conditions of service, I shall be prepared to receive and consider constructively such a package and, if it is attractive enough, do my best to find some resources to help. I have given that undertaking and I repeat it today.
    Mr. Hirst: When my right hon. Friend meets the general secretary of the EIS, will he tell him that many people in my constituency find the tactics of the EIS in victimising pupils who happen to be represented in

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    Parliament by Conservative Members absolutely unfair and disgraceful and very much at odds which the professional standing of teachers?
    Mr. Younger: I absolutely agree with my hon. Friend. I have found that even people who are sympathetic to the teachers' cause and who think that the Government should have taken various steps to avoid the present state of affairs are incensed that they should be picked on because of the constituency in which they happen to live. What is happening is quite unjustified at a time when I have made a perfectly reasonable offer to the teachers, and, as every day passes, it is becoming more difficult to implement it.
    Mr. Maxton: Does the Secretary of State know, as I do, senior teachers who live in Conservative-controlled district council areas, who are at the top of their salary scale in promoted posts and who will require a 3·5 per cent. increase in salary simply to pay the increase that is being demanded in rates? Does that not illustrate clearly the rightness and justice of the teachers' claim and also the absolute mess into which the Secretary of State has got on the rating system?
    Mr. Younger: Neither of those things is indicated by what the hon. Gentleman has said. The issue we are concerned with here is that teachers feel that they have been badly treated and have grievances they want sorted out. There is no doubt about that. They have decided to take industrial action in the schools instead of using the machinery set up for the purpose of sorting out the problem. That is not justifiable and I hope it will stop.
    Mr. Bruce: Will the Secretary of State acknowledge that his suggestion that he is prepared to make an offer to the teachers would have more credibility if he had not proposed a £64 million cash cut in next year's education budget? Will he now admit that that was a mistake and restore it? In those circumstances he might reasonably expect the teachers to respond. Will he further admit that finding £38 million for the ratepayers when there was so much protest but not being able to find money for the teachers was a rather cynical choice on his part?
    Mr. Younger: Both those points are extremely poor. The first one—sorry, I have forgotten what the first one was—
    Mr. Bruce: The first one was that the Secretary of State has cut next year's education budget by £64 million.
    Mr. Younger: I am grateful to the hon. Gentleman; I am sorry that it slipped my mind. The reduction in the education budget for several years was not as large as the reduction in the number of pupils. Therefore, the amount of money allocated per pupil is at its highest level ever. That should not be overlooked. In regard to the hon. Gentleman's general point, may I repeat that the teachers have a perfectly good way of dealing with their problem. It is getting more and more difficult every day to carry it out, if they come to it, but they have to produce a package of pay and conditions of service.
    Mr. Malone: Is my right hon. Friend aware that between 1983 and 1984 in Scotland there was an 8 per cent. increase in funding for education per head of population? If that is compared with the figure for England, current spending per head in Scotland is 35 per cent. ahead of spending in England. Is that not a sign that my right hon. Friend is working very hard for education in Scotland?
    Mr. Younger: I welcome my hon. Friend's efforts to put a bit more realism into the debate on education. The talk about cuts in education cannot be seen except against a background of large reductions in the number of pupils. The fact is that the Government have managed to find enough money to ensure that the amount per pupil has been increasing all the time. There is no excuse, therefore, for standards of education falling.
    Mr. Tom Clarke: When the Secretary of State gives thought to the important matter of pay, will he bear in mind the widespread discontent among teachers, parents and pupils about the childminder exercise, whereby teachers are being asked to teach subjects about which they know very little and to deal with disciplines which do not relate to their background? Given the serious problem, will the Secretary of State discourage his hon. Friends from making the kind of negative and unhelpful comments that they have made in the House this afternoon?
    Mr. Younger: I have not heard any negative and unhelpful comments from the Government side of the House. I appreciate that the teachers have strong views, which vary very much between different teachers, about the sort of duties that the hon. Gentleman has mentioned. It is not for me to make pronouncements about them in the House of Commons. It is for the teachers to negotiate with their employers in the joint negotiating committee. That is the place where they should be sorted out.
    Mr. Dewar: The Secretary of State will be aware, of course, that the EIS national council is meeting on Monday. Does he agree that it is very important that everything should be done to persuade the EIS that negotiations would be worth while and would be approached in a reasonably flexible spirit by the Government? In view of that, can he confirm that on Channel 4 news, I think last night, in an interview the right hon. Gentleman said that the negotiations should be not just about pay but also about improved conditions of service? It is important to establish exactly what the right hon. Gentleman meant by that, because the inclusion of conditions has always been taken as meaning that there should be a deterioration in conditions in order to buy some increase on the pay side. If he genuinely means that he is prepared to look at improvements in conditions of service, will he underline that before Monday so that the EIS and other teachers are aware of it?
    Mr. Younger: I am grateful to the hon. Gentleman, who has raised an important point. I certainly join him in hoping that if the EIS has a council meeting on Monday it will think very long and hard about the industrial action and about the suggestion that it should settle its problems in the joint negotiating committee.
    On the deterioration in conditions, what I said during the Channel 4 programme was what I have been saying all along, namely that the package which I hope will come out of the negotiating committee should cover pay and conditions of service. Teachers have several times questioned whether that means a deterioration or an improvement in conditions. I do not put it as strongly as that. I put it in an extremely neutral sense. They must address themselves to conditions of service, and I do not want to pre-empt which way that goes. I would need to have a package which included both pay and conditions of service to justify any attempt to find money from other parts of my programme to fund the package.

  SOLICITOR-GENERAL FOR SCOTLAND

    Coal Industry
    Mr. Canavanasked the Solicitor-General for Scotland how many people have been (a) arrested, (b) charged, (c) prosecuted and (d) convicted in Scotland as a result of incidents related to the miners' strike.
    Mr. Hirstasked the Solicitor-General for Scotland how many people in Scotland have been successfully prosecuted for offences arising from the miners' strike.
    The Solicitor-General for Scotland (Mr. Peter Fraser): As at 6 March 1985, 1,504 persons had been arrested, 1,483 persons had been charged by the police and proceedings have been instituted against 1,046 persons. Five hundred and eighty-three persons had been convicted as a result of incidents related to the miners' strike, but there are a number of cases still to come to trial.
    Mr. Canavan: If the Crown Office is unwilling to drop all pending charges as a gesture of reconciliation, will the Solicitor-General at least instruct the procurators fiscal that there is no need to report to the National Coal Board every case involving a miner—otherwise, they are liable to be punished twice for the same alleged offence? Does the Solicitor-General agree with the chief constables of Central region and Fife that tension in the coalfields would be greatly reduced if Albert Wheeler was seen to be more willing to reinstate sacked miners?
    The Solicitor-General for Scotland: The basis on which people have been charged in connection with offences arising out of the miners' strike is exactly the same basis on which charges are brought against other people in the courts for the whole range of criminal activities, quite regardless of the miners' strike. As far as I can ascertain, about 251 cases still have to be brought to the courts in Scotland. I hope that they will be dealt with during the next two or three months.
    I must emphasise that the traditional role of the prosecutor in Scotland ends once a conviction or an aquittal is secured. It would be a wholly unacceptable departure from that role if I were to become involved in other matters subsequent to that, or, indeed, if my noble and learned friend the Lord Advocate were to do so.
    Mr. Hirst: Does my hon. and learned Friend agree that his answer confirms the highly disagreeable nature of the violence and intimidation that sustained the miners' strike in Scotland? Does he agree that the National Coal Board is right to refuse to grant an amnesty to those convicted properly in the courts of crimes of violence and destruction of property?
    The Solicitor-General for Scotland: The matter of dismissal by the NCB is entirely a matter for the NCB. As my hon. Friend the Under-Secretary of State, the Member for Eastwood (Mr. Stewart), has already said, if the dismissed miners take exception to that, they have another remedy available to them. From what I heard earlier, it would be quite wrong to trivialise some of the offences committed during the miners' strike or to pretend in any way that they were not serious. Rather surprisingly, unlike the Leader of the Opposition, some Scottish Members of Parliament seem to be under the misapprehension that there has been no violence and no serious offences arising out of the miners' strike.
    Mr. Millan: Does the Solicitor-General for Scotland not realise that it is not so much what is happening in the courts that is causing widespread anxiety, as the action of the NCB in Scotland? Why do Ministers not stop being apologists for the NCB and make it clear that it would be in everyone's interest to reduce the tension, bitterness and resentment in the Scottish coalfields and the surrounding areas, and try to encourage people to live together again in a civilised manner at the end of this difficult dispute? Ministers have a responsibility, and we are asking them to exercise it.
    The Solicitor-General for Scotland: As the right hon. Gentleman fully appreciates, it has never been the role of the public prosecutor in Scotland to become involved beyond the stage of conviction or acquittal. The right hon. Gentleman, of all people, should appreciate that if the Government were to say at this stage that the 200-odd cases that are still to come to court should be withdrawn, we would be adopting a political stance as unacceptable as would have been an initial approach to the cases on a political basis.
    Mr. Bill Walker: When we consider the cases that have come before the courts and been decided, and those that have still to come to court, must we not bear in mind the public's attitude to the many policemen who were badly injured in carrying out their duties? The public expect such matters to be dealt with properly.
    The Solicitor-General for Scotland: Yes, indeed. A considerable number of police officers in Scotland were injured during the course of that unhappy industrial action. The offences have not been trivial. For instance, an iron bar was thrown through the window of a three-year-old child's bedroom and landed on the bed. Such matters are not to be swept aside and forgotten. [Interruption.] The courts should consider such cases and should consider the question of innocence or guilt, and it is for the courts—not for hon. Members—to impose the necessary fines or terms of imprisonment.
    Mr. Strang: Does the Solicitor-General for Scotland recall the representations that he received from my hon. Friend the Member for Midlothian (Mr. Eadie), and the meeting that he had with the hon. Member for Edinburgh, Leith (Mr. Brown) and myself, about the position of Mr. David Hamilton, the chairman of the Lothian strike committee, who languished for nine weeks in jail and was then found not guilty? Will the Government recognise that the truth is that the NCB management in Scotland wishes to sack people because they were active in the strike and not because of anything else that they have done? That is why the Government and the NCB are isolated on this matter. When will there be some change in the situation?
    The Solicitor-General for Scotland: I recall that meeting, at which I gave the hon. Gentleman an undertaking that the matter would be brought to court as quickly as possible, as indeed it was. I cannot see why the hon. Gentleman takes exception to that. Mr. Hamilton had the opportunity to be tried before a jury. He was acquitted. So far as I am concerned, the matter ends there.
    Mr. Dewar: Will the Solicitor-General for Scotland accept that, sadly, he is misrepresenting the Opposition's case? Our case is that there are undoubtedly a number of people who, by any yardstick, have not been involved in serious crime, assaults on fellow workers or destruction of

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    property, but who have been convicted on charges that have attracted only admonitions or small fines; and have been dismissed. Unless there is a proper review procedure based upon justice in individual cases, as there seems to be in other NCB areas, people in Scotland will retain the unpalatable and unacceptable impression that men have been sacked for who they are and not for what they have done.
    The Solicitor-General for Scotland: If anyone is seeking to misrepresent the situation, it is the hon. Gentleman. He knows perfectly well that I have neither responsibility for, nor any involvement with, the chairman of the NCB either on a national or a Scottish basis. My concern is the prosecution of crime in Scotland. If the hon. Gentleman has any complaint to make about any particular case, he should make it to me. So far as I am aware, no one has yet made such a complaint. If the hon. Gentleman is saying that we have been involved politically in the prosecution of those people, he has made an extremely serious allegation.
    Mr. Dewar: That is not the point.
    The Solicitor-General for Scotland: The hon. Gentleman says that that is not the point, but he has raised it with me this Question Time.

    High Court Trials
    Lord James Douglas-Hamiltonasked the Solicitor-General for Scotland whether he can give an estimate as to the length of time on average it takes for cases, reported to him, the Lord Advocate, or to procurators fiscal (a) to be brought to the High Court and (b) to be conducted during 1984–85; and whether it is his policy to ensure that cases are heard as quickly as possible.
    The Solicitor-General for Scotland: The Crown is required by statute to serve an indictment on accused persons who have been refused bail within 80 days of full committal, and to commence the trial within 110 days. There is limited provision for extension, but in 1983, which is the latest year for which figures are available, only six cases did not come to trial within 110 days.
    The Crown endeavours to serve an indictment as early as possible, and in custody cases this is generally done within 70 days. In High Court cases where the accused is released on bail, the trial must be commenced within 12 months of first appearance of the accused on petition. No figures are available to indicate the length of time taken to conclude cases once the trial has commenced.
    Lord James Douglas-Hamilton: In view of the great increase in the number of drugs cases, will my hon. and learned Friend confirm that steps will be taken to ensure that reported cases are brought to trial as quickly as possible?
    The Solicitor-General for Scotland: Yes, there is a tight statutory timetable to be adhered to. Possibly of greater importance and interest to my hon. Friend is the fact that my right hon. and noble Friend the Lord Advocate has decided that cases involving the supply of hard drugs in Scotland should generally be brought in the High Court to ensure that the full range of penalties is available to the court.
    Mr. Kenneth Carlisle: On a point of order, Mr. Speaker. You will understand that an English hon.
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    Member comes into Scottish questions with some trepidation. You will also know that I have tabled Question No. 12 on forestry policy—
    Mr. Speaker: Order. I am sorry that the hon. Gentleman's question was not reached. I cannot deal with that matter. I hope that the hon. Gentleman will not ask his question now.
    Mr. Carlisle: The point is whether forestry questions should be down for answer by the Secretary of State for Scotland, as they apply to the whole of the United Kingdom. That is unfortunate for hon. Members with English constituencies. Is it possible for the matter to be reviewed?
    Mr. Wilson: Further to that point of order, Mr. Speaker. Hon. Members representing Scottish constituencies will have noticed the increasing number of English Members who have come to Scottish questions recently — [HON. MEMBERS: "Why not?"] — thus making it difficult for Scottish Members to monitor the work of the Secretary of State for Scotland, which covers some eight or nine Ministries. Taking forestry questions, which is a United Kingdom function, during Scottish questions is attracting even more English Members to Scottish questions. They are caught up in the magnificence of our proceedings and join in, thus making it more difficult for us to get a word in edgeways. If Scottish questions are to include other matters such as forestry, is it not desirable to have Scottish questions every three weeks, as used to be the case, rather than every four?
    Mr. Robin Maxwell-Hyslop rose—
    Mr. Forth rose—
    Mr. Robert Hughes rose—
    Mr. Speaker: Order. This takes up a lot of time.
    Mr. Forth: Further to that point of order, Mr. Speaker. Will you confirm that hon. Members who represent English constituencies are as entitled to attend Scottish questions as are Scottish Members to attend and participate in other Question Times?
    Mr. Robert Hughes: Further to that point of order, Mr. Speaker. May I draw your attention to the fact that Scottish questions overran the allotted time to 3.20 pm by a couple of minutes? I am not complaining about that—
    Mr. Speaker: One minute.
    Mr. Robert Hughes: One minute. Had the hon. Member for Lincoln (Mr. Carlisle) not immediately jumped up on a point of order, my question, No. 45, might have been called in injury time. As it has not been reached, may I give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity?
    Mr. Ewing: Further to that point of order, Mr. Speaker. I understand and sympathise with the difficulties of the hon. Member for Lincoln (Mr. Carlisle). Leaving out questions to the Solicitor-General for Scotland, Scottish Office Ministers answered 10 questions today.
    When previously I raised with you the question about which hon. Members you allowed to catch your eye, you rightly told me that you attempted to call hon. Members with questions on the Order Paper and said that if the Opposition Front Bench did not take up so much time, more Back Benchers would be called. I thought that. I

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    should point out that, while at our previous Scottish Question Time, my Front Bench colleagues and myself rose on only three occasions and today on only four occasions, that did not help progress during Scottish questions. You chose to call five Conservative Members—four English and one Scot—who did not even have questions on the Order Paper. What is the position? Will hon. Members with questions on the Order Paper be called, or given that there is a serious shortage of Scottish Tories, are the Government packing the Conservative Benches with English Tories to try to achieve a balance?
    Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. This raises a point of some substance. It is an observable fact that Scottish, Welsh and Northern Ireland Members expect to catch your eye with greater facility on matters affecting their parts of the United Kingdom. However, they expect to catch your eye with equal facility when Ministers from the English part of the United Kingdom are answering questions. This is a serious rather than a trivial or passing matter, and the only way
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    to resolve it is to declare that, apart from the hon. Member who has tabled a question, we are all Members of the Parliament of the United Kingdom and have an equal aspiration to good fortune in catching your eye.
    Mr. Canavan: Further to that point of order, Mr. Speaker. Do you agree with me that all these complaints and time-wasting tactics strengthen the case for setting up a Scottish Parliament?
    Mr. Speaker: The hon. Member for Tiverton (Mr. Maxwell-Hyslop) is correct. This is the United Kingdom Parliament, and everyone has an opportunity to catch the eye of the Chair. I make a judgment every day—I think I have said this before—about matters of interest to Members. Today I judged that the miners' strike, rating and teachers' pay were matters of considerable interest. It would have been possible to race down the Order Paper, but I managed to called 28 hon. Members, 16 of whom had later questions on the Order Paper on those very topics. I do not think that we should ever exclude English Members just because it is Scottish Question Time.

British National Oil Corporation
3.38 pm
The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): With permission, Mr. Speaker, I wish to make a statement about the British National Oil Corporation. I hope that it is for the convenience of the House that I make this statement now, in view of the debate arranged for tomorrow.
In the summer of last year, the Government reviewed the institutional arrangements and operations of BNOC. We then concluded that the balance of advantage lay in retaining the corporation in its present form, given the contribution that it was able to make to deriving full benefit from our oil resources.
Since then, the environment in which BNOC has to operate has undergone important changes. BNOC has traditionally operated by purchasing and selling oil under term contracts at prices fixed for a period of months ahead. Its purchases under participation contracts have been in this form which, as I explained to the Select Committee on Energy, has enabled BNOC to make a contribution to stability of markets in the short term.
There has, however, now been a major change in the structure of the oil market away from term contracts and towards spot and similar short-term transactions. This trend is unlikely to be reversed in the near future. In these circumstances, BNOC could avoid the risk of losses only by linking its prices for participation oil closely and continuously to movements in the spot market. Such a system would mean that BNOC could no longer contribute to stability in the market. The Government have concluded that this shifts the balance of advantage decisively against the retention of BNOC in its present form. I see no advantage in retaining a public sector body to operate on that basis.
The change in market structure that I have described has led me to the conclusion that BNOC should no longer purchase oil by exercising its options under participation agreements. Dealing in participation oil has been the dominant part of BNOC's activities.
The Government consider it essential to retain powers that would enhance security of supply if that proved to be necessary. We will therefore retain the participation agreements themselves so that we can activate them to have access to these oil supplies should the need arise. We will also retain the arrangements under which we have the power to receive oil from continental shelf licensees as royalty in kind. Those two factors together mean that security of supply will continue to be safeguarded.
I see a need in present circumstances to retain one other function of BNOC—the management, as agent for the Government, of the Government oil pipeline system. This system is important for both defence and civil purposes.
The retention of those three functions—custody of the participation agreements, disposal of oil received as royalty in kind and management of the Government pipeline system—requires the establishment of a small Government oil and pipelines agency as a successor body to BNOC. The abolition of BNOC and the establishment of the agency for the purposes that I have described will require legislation, and I intend to introduce this in the present Session of Parliament.
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Finally, I wish to express the Government's thanks for the valuable work carried out by the chairman, board and staff of BNOC.
Mr. Ted Rowlands: The Minister's statement is as disgraceful as it is incredible. As recently as 18 December he told the House of the important, vital and crucial role that BNOC could play and was playing in securing and controlling the nation's oil supplies. He now announces its abolition.
The notion that the Department of Energy can handle participation agreements and the complex problems of buying and selling oil is incredible. How many people with experience and professionalism in oil trading has the Department of Energy compared with Mr. Goskirk and the BNOC team? The statement is a disgraceful kick in the teeth for some of the most professional oil traders in the country?
The only lame excuse for abolishing BNOC is that it could no longer contribute to the Government's propping up of the oil price policy, but that was never its intention or original purpose. Deliberate intervention by the Government in the past few months has created the corporation's problems.
Did not the Minister himself recently carry out a review of BNOC's role and totally reaffirm its vital part in the management of our oil affairs? We then heard that the Prime Minister's private policy unit had been further reviewing the corporation's role. Is it not absolutely clear that, on a major aspect of energy policy, the Department of Energy has now been taken over by the Prime Minister's policy unit? Given the very personal and honourable involvement of the Minister of State in supporting BNOC, should he not resign as a result of this decision?
The Minister's announcement is a final act of vandalism in the breaking up and dismantling of a highly successful and profitable corporation set up under the Oil and Gas (Enterprise) Act. BNOC belonged to this nation. It was the only corporation with 100 per cent. loyalty to the nation. We shall oppose this legislation tooth and nail. We commit ourselves to re-establishing BNOC, which will safeguard and develop our precious national oil resources.
Mr. Buchanan-Smith: I only wish that the hon. Gentleman had read the statement, or at least listened to me. There is no question of the Department of Energy taking over the participation agreement functions. We intend setting up the oil and pipelines agency to exercise the powers under the agreements.
I make it absolutely clear to the hon. Gentleman that this decision is my decision and that of my right hon. Friend the Secretary of State with the agreement of colleagues. I can assure the hon. Gentleman that the policy unit to which he referred advises my right hon. Friend the Prime Minister. I have received no advice or representations from that body.
The hon. Gentleman cannot sit like Canute and completely ignore market conditions. He cannot defend a body and its functions when that body is no longer appropriate.
Mr. John Hannam: Will my right hon. Friend accept our thanks for making this statement today in advance of the debate that is due to take place tomorrow? Will he accept that those of us who have supported BNOC's role as a protective mechanism to ensure security

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of supply and as a stabilising influence on the oil market recognise that the position has changed dramatically during the past few months and that, therefore, we welcome my right hon. Friend's decision?
Mr. Buchanan-Smith: I am grateful to my hon. Friend. He is absolutely correct. Two things are important. First, BNOC's ability to help in the short term is now severely limited. Secondly, we are retaining certain functions, especially the participation agreement and royalty in kind, which are important in relation to security of supply.
Mr. Gordon Wilson: Does the Minister not realise that this is yet another chapter in the story of bungling ineptitude in relation to the development of offshore oil which could have job implications for Scotland if the world oil price falls? Does the right hon. Gentleman not realise that the real answer is to have an adequate depletion policy with production cuts in open association with OPEC to sustain the world oil price? Without that, the Government will find themselves floundering completely.
Mr. Buchanan-Smith: Before the hon. Gentleman pursues that line, he should study not only how BNOC operates but the evidence to the Select Committee, and its recommendations.
Mr. David Howell: Will my right hon. Friend accept that, contrary to the primitive views that we have heard from the Opposition, his decision is wholly welcome? The decision will be warmly welcomed by all those who are interested in lower prices for the consumer and a stable oil market. Will my right hon. Friend concede that the existence of a quasi-official oil price for North sea oil has created great difficulties for the Government and that the apparent size of intervention to hold up the OPEC price has not helped stabilise the oil market? Will my right hon. Friend accept that, by his decision and, I hope, future policy, United Kingdom industry will help the world oil price to settle down and so bring benefits to sterling and oil consumers?
Mr. Buchanan-Smith: My right hon. Friend is correct. If BNOC had now moved to a market-related type system, as recommended in some quarters, that could have destabilised the oil market. In those circumstances, I think that there is no purpose in maintaining a particular state function in this area. The market has changed, and I believe that it is right and realistic to recognise that. I am grateful for my right hon. Friend's remarks.
Mr. Ted Leadbitter: I think that the Minister might not take too much notice of the right hon. Member for Guildford (Mr. Howell), who was a well-known failure as Secretary of State for Energy. Apparently, from what I have hard, the truth is foreign to the Minister. [HON. MEMBERS: "Question."] When the Select Committee on Energy asked about the restructuring proposals for BNOC, why was it advised by the Minister's officials to write to the Prime Minister? When the Select Committee did so, the reply was that the matter being considered was confidential. The Select Committee has been bypassed by this statement. Will the Minister now try, as a simple exercise, to associate himself, for once, with the truth?
Mr. Buchanan-Smith: There is no question of bypassing the Select Committee or anyone else. If the hon. Gentleman had only listened to the questions and the answers given in the Select Committee, he would know that there was a question about the role of a particular body. If he had listened to my answer to the Select Committee or read its report he would know that I was asked whether BNOC's role was being reviewed. I said that that was continuing in relation to the circumstances. The decision has been taken because of the changed circumstances.
Mr. Leadbitter: It was last week.
Mr. Buchanan-Smith: Therefore, the hon. Gentleman himself should perhaps be paying more attention to the truth than trying to preach to others.
Mr. Ian Lloyd: I thank my right hon. Friend for announcing these proposals so that we may consider them carefully, and have a rather more intelligent debate tomorrow than we might otherwise have been able to do.
Mr. Leadbitter: It is not true.
Mr. Dick Douglas: It is nonsense.
Mr. Speaker: Order.
Mr. Lloyd: Secondly, although the Select Committee has plainly had no chance to consider the proposals, and since it may be argued that they follow our recommendations fairly closely, I hope that they will be received with some enthusiasm by the Committee. Do the Government expect the new organisation to be self-sustaining, and, if so, which section of its operations will be revenue-producing?
Mr. Buchanan-Smith: Its main purpose is to work as an agency for the Government for some of BNOC's current functions. The Government already pay fees for some of BNOC's functions. The details of the financing are still to be worked out; that will be done during the preparation of legislation. I am grateful for what my hon. Friend said about the Select Committee's role. Although, in the outline of these proposals, we have not necessarily followed exactly what the Select Committee recommended, the deliberations of my hon. Friend and the other members of the Select Committee over the past six months helped us to reach a decision on this matter.
Dr. Jeremy Bray: Can the Minister of State offer any evidence that dealing on the spot market necessarily has less influence on stabilising prices than dealing with long-term contracts?
Mr. Buchanan-Smith: Yes, I think so. I believe that the terms for acquiring participation oil have a strong potential for destablising the market. Moving to a market-related price system means frequent price changes related to the spot market. It also has the effect of accentuating market trends. Those involved in sales realise the potential for instability.
Mr. Michael Morris: Is my right hon. Friend aware how welcome it will be to the country to find a Department of State that reacts to changed market circumstances and at the same time safeguards the nations's security of supply?
Mr. Buchanan-Smith: I am grateful to my hon. Friend.
Mr. Kevin Barron: May I remind the Minister that the Select Committee on Energy has never considered the proposals contained in his statement? For the Chairman to stand in the Chamber and say that it has is completely wrong. The Committee has never discussed the proposal. I will discuss it at the next meeting. The pressure that has been on the Committee for the past six months and which lies behind the statement has come from the oil lobby and not, to my knowledge, from members of the Select Committee. What has been said today is a further attack on the national interest such as has gone on for many years with this Government. I am afraid that the national interest will lose as a result of what is happening to BNOC.
Mr. Buchanan-Smith: The hon. Gentleman has to answer for himself in regard to what the Select Committee said. I said that the deliberations—
Mr. Barron: It is there.
Mr. Speaker: Order.
Mr. Buchanan-Smith: I said that the Select Committee's deliberations were a help in reaching the decisions which we have announced today. (Interruption.)
Mr. Speaker: Order.
Mr. Buchanan-Smith: I said a few moments ago that in some respects we had not followed the Select Committee's recommendations. The national interest was uppermost in the discussion that we had before reaching this decision. We have retained the functions of BNOC that we believe are unnecessary and important to the national interest and discarded those which we believe are unnecessary in a changed market.
Mr. Tony Speller: Does my right hon. Friend accept that the purpose of Government is to seek lower prices for fuel for industry, commerce and private households, and that anything which works towards that, as this move may do, is to be welcomed? I congratulate the Government on the decision.
Mr. Buchanan-Smith: I must emphasise that the role of BNOC in fixing a price is related to the short term, to avoid destabilising the market. I do not believe that BNOC either has, or has attempted to exercise, the power to influence prices in the long term. In those circumstances, and given the fact that it no longer has the same number of contracts as previously because of the changed market, it is right to take this decision.
Mr. Ian Wrigglesworth: Do not the events of recent weeks demonstrate the enormous importance of the impact which oil prices and the rate of oil depletion have on the value of the pound, interest rates and our economy? In view of today's statement and the confusion that the Minister's statement on oil pricing to the Select Committee caused, will he make it clear to the House how in future the Government intend to protect the national interest in relation to oil prices and oil depletion?
Mr. Buchanan-Smith: I would urge the hon. Gentleman, as I have urged others, to read my evidence and that of other people to the Select Committee. BNOC has no power to influence the prices of oil in the long term. There has been power in the short term so long as market conditions make it possible for BNOC to operate term contracts. The hon. Gentleman must face up to change,
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not only in the United Kingdom oil market, but in world oil markets, which have shifted decisively and on a longer-term basis to spot sales, not contract sales. In the light of that, the decision was taken.
Mr. Patrick McNair-Wilson: Has my right hon. Friend had discussions with representatives of the other major oil producers to reassure them that his action today does not pave the way for a major price war, with all that that could mean for sterling? Will he confirm that it is in our national interest to keep an orderly oil market?
Mr. Buchanan-Smith: Obviously, there have not been consultations about this decision with OPEC, to which I think my hon. Friend refers. The decision will be well understood. Contrary to the views expressed by Opposition Members, the decision accepts the realities of the position.
Mr. Dennis Skinner: Is the Minister aware that, when a Labour Government set up BNOC, they did only half the job? One reason why the Minister can do what he has today announced he will do through ensuing legislation is that they gave BNOC only the ability to buy and hold oil, not to take over the companies. Is it not a fact that this is a prelude to allowing the Yanks to get their hands on British oil to a greater extent than at present, especially as she at No. 10 will be in control of it for a while? Is it not a scandal that Ministers at the Department of Energy are letting the Prime Minister dominate them to the extent that she will control part of their Department because she does not trust them?
Mr. Buchanan-Smith: Characteristically, the hon. Gentleman has not recognised the position. I hope that he noted what I said about participation oil and royalty in kind. In that sense we are certainly looking after the national interest. During the past 20 years the success of the development of the North sea has been a prime example of all the best aspects of the private enterprise system. If we had not had that, the country would not now benefit to the degree that it does.
Mr. Rob Hayward: I welcome the statement, but will my right hon. Friend accept that the Select Committee's report, which was published earlier this week, identified some contradictions, and that it was therefore right for the Government to take some action in whichever direction because of those contradictions which had been identified?
Mr. Buchanan-Smith: It would have been most dangerous if there had been any speculation or indecision about what might happen in future. The matter is sensitive for many market areas and the economy generally. Therefore, I welcome what my hon. Friend has said.
Mr. Dick Douglas: Will the Minister of State, who is fundamentally an honest man, tell us what change there has been in the world market between 6 March, when he gave evidence to the Select Committee, and today? On 6 March, he gave no sign that he would abolish BNOC. Is it not true that there is instability in the world oil market partly because of Government greed? Britain and Norway together produce more than the Saudis, and we are doing that because the Government are hooked on getting revenue. That is the real reason for the present difficulties.
Mr. Buchanan-Smith: If the hon. Gentleman reads my evidence to the Select Committee, he will find that I made it clear then, as I did in December, that the functions of BNOC are reviewed by the Government in the light of changing circumstances. Of course, there was no major change in the past week. The hon. Gentleman shows the most extraordinary ignorance of the circumstances of the market if he believes that one should trail one's coat for some days before a decision is taken. Surprisingly, he also shows ignorance about Norwegian and United Kingdom production in the North sea if he tries to liken production offshore in the deep and hostile waters of the North sea to onshore production in the middle east. The position is completely different, and he should recognise that.
Mr. David Heathcoat-Amory: My right hon. Friend's statement will be warmly welcomed by British industry. Does he agree that there may be a short-term weakening in the domestic price of oil, which would be good news for British industry and employment, although it is not welcomed by the Opposition?
Mr. Buchanan-Smith: Obviously, the market will have to choose the way in which it reacts, but, given the firmness of the decision, I hope that the market will settle quickly.
Mr. Archy Kirkwood: The Minister said that he had yet to work out the financial implications of the changes that he has announced. Can he give us an idea of when he will be able to do that? Does he agree that the need to retain participation agreements to secure oil supplies means that we should ensure the supply of products, not just the crude oil, because that must be given to the major companies anyway? In a time of crisis, we need the products, not the supplies.
Mr. Buchanan-Smith: I must ask the hon. Gentleman to await an announcement on the details of the legislation, although all these and other details will be discussed with the chairman of BNOC. As to security of supply, we already have in place arrangements with oil companies, especially those which refine oil and which, therefore, have considerable control over products, not just crude oil.
Mr. Nicholas Budgen: Is my right hon. Friend aware that his decision will be greeted with relief and even delight in the west midlands and in all areas that depend upon heavy manufacturing industry? Is he further aware that it has always been difficult to explain why taxpayers' money was being used to rig oil prices so as to make oil more expensive than it would otherwise have been?
Mr. Buchanan-Smith: In fairness, there is no question of taxpayers' money being used to rig oil prices. As I acknowledge today and have acknowledged on many previous occasions, when BNOC had many term contracts for oil it was able to operate a stabilising influence on the market. It has done so successfully, but we must recognise that the market has changed. In that sense, I am grateful for what my hon. Friend said.
Mr. Bruce Millan: The Minister talked about accepting the realities of the position. Is he saying that the Government have no depletion policy at all and that they are not interested in stabilising oil prices, which is very much in the national interest? Is he abandoning responsibility for all those factors?
Mr. Buchanan-Smith: I am certainly not abandoning responsibility. As to depletion, the right hon. Gentleman should remind himself of the Labour Government's policy and the assurances that they gave on that before he makes such a statement.
Mr. Gerald Malone: My right hon. Friend will be aware that during the two Select Committee inquiries into this matter there was some scepticism about the ability of BNOC to control short-term fluctuations in prices. There will be a recognition throughout the House that he has been exceptionally perceptive in following the market trend. Can he say whether Opposition Members are as perceptive if they are thinking of controlling depletion in the North sea? Would that not go completely against market trends and drive away investment?
Mr. Buchanan-Smith: Yes. With heavy front-end investment in the North sea, if one followed the sort of policy advocated by the right hon. Member for Glasgow, Gowan (Mr. Millan) it would hinder development and would be to the detriment of the United Kingdom economy, and especially that of Scotland.
Mr. Allan Rogers: Since some of the Minister's hon. Friends have said constantly that there will be a reduction in oil prices as a result of the decision, will the Minister confirm today that the decision will not affect oil or petrol prices? Secondly, how many jobs will be lost as a result of the decision?
Mr. Buchanan-Smith: BNOC currently employs about 140 staff. We shall need staff to run the new agency, and numbers and details will be discussed with the chairman of BNOC. There is no way in which I can predict what will happen to prices, any more than I was able to predict in the past.
Mr. Andrew Faulds: Is this not yet another disgraceful example of the Government's ludicrous commitment to their ideological theories, regardless of the national interest or of international oil stability?
Mr. Buchanan-Smith: The hon. Gentleman is completely wrong. Had he listened to my statement, he would have heard that we are retaining some functions that will be operated on an agency basis on the Government's behalf, where we believe those functions to be necessary in the national interest. We are discarding unnecessary functions, and I would have hoped that the hon. Gentleman would have welcomed that as an efficient Government move.
Mr. Gavin Strang: But is not this announcement another small element in the process that will lead historians to look back and wonder how the British people could so tragically have squandered this major natural resource? In view of the Minister's answer to my hon. Friend the Member for Rhondda (Mr. Rogers), and as his statement made no reference to staff, will he at least give an assurance that all jobs and present conditions of employment and salaries will be maintained?
Mr. Buchanan-Smith: I paid a tribute to the staff, who, as I hope the hon. Gentleman recognised, have done a good job. Their future is something that will be properly discussed with the chairman and with those representing the staff.
Mr. Rowlands: Will the Minister clarify a couple of his replies? First, will he confirm that in January and February this year, the Government and his Department encouraged BNOC to maintain those price levels, and that the Government were wholly committed to that policy? It was not BNOC's policy, but the Government's. Secondly, until legislation is passed, BNOC will be operating and will have to make decisions about prices in March and April or until the legislation goes through. What will BNOC do in determining those contracts, which involve large amounts of oil, before the legislation—if it gets through the House—is passed?
Mr. Buchanan-Smith: On the first question, BNOC has fixed prices in full consultation with the Government during recent months, for reasons which I explained clearly and unequivocally to the Select Committee. Decisions have not yet been taken, nor have recommendations been made, on future market prices. The hon. Gentleman will have to await them.
Mr. Leadbitter: On a point of order, Mr. Speaker. During his statement and subsequently, the Minister said that the conclusions that have now been drawn arise from—
Mr. Speaker: Order. The hon. Gentleman is a very distinguished member of the Chairmen's Panel. He should address his point of order to me, not to the Minister.
Mr. Leadbitter: I was trying, Mr. Speaker. The Minister said today that the conclusions that he has drawn and that have now been made available to the House arise from some observations on the report of a Select Committee of which I am a long-serving and, if I may say so, distinguished member. Since we are having a debate tomorrow, is it proper and in order that that observation by the Minister should be considered by the House? I find nothing in the report which suggests that the Select Committee helped the Minister, in even the minutest way, to arrive at the conclusion that he did.
Mr. Speaker: If the hon. Gentleman is not chairing a Committee tomorrow, the best course for him to adopt would be to seek to take part in the debate, when he will doubtless be able to make that point.

British National Oil Corporation

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 29 MARCH
  Members successful in the ballot were:
  Dr. Norman A. Godman
  Mr. Barry Sheerman
  Mr. Patrick Thompson

Advisory, Conciliation and Arbitration Service (Amendment of Statutory Duties)
4.10 pm
Mr. Tony Baldry: I beg to move,
That leave be given to bring in a Bill to amend the statutory terms of reference of the Advisory, Conciliation and Arbitration Service (ACAS) by repealing its statutory duty to encourage the extension of collective bargaining and to impose instead a duty to encourage co-operation and consultation between employers and employees at the place of work.
ACAS currently has a statutory duty to encourage the extension of collective bargaining. I believe that it should more appropriately be charged with the duty to promote better co-operation and consultation between employers and employees at the place of work.
The Government have rightly pursued a programme that has modernised British employment law. In a series of Acts of Parliament the objectives have been, first, to make trade unions more accountable to their membership and, secondly, to restore the balance of trade union immunities where they were clearly excessive. This modernisation of the employment law is an essential step towards making British labour relations more co-operative and less divisive. The aim of us all must be to help all those who work in an enterprise, not to undermine the health of the business by fighting one another but instead to work together in a spirit of co-operation for the success of the enterprise so that it can more readily create new prosperity and new opportunities for employment. If we as a country are to enjoy greater economic success, we clearly need to move away from the entrenched "them and us" attitudes which have their origin in an outdated doctrine of class warfare which our country can no longer afford.
ACAS was established under the Employment Protection Act 1975. The right hon. Member for Blaenau Gwent (Mr. Foot) introduced it with terms of reference that had been provided by the Trades Union Congress and its advisers. Not surprisingly, the trade unions were anxious to raise their membership to the highest possible level and chose to do so not by offering their members and potential members an attractive service but by the compulsion of statute.
Although the Act provided that ACAS should be independent of the Government of the day, its original terms of reference were unfortunately partisan. Sections 11 to 16 of the Act established a procedure whereby trade unions could use the services of ACAS and the central arbitration committee to seek to obtain recognition from employers. This was a partisan procedure. It cast doubt on the impartiality of ACAS and led many employers to regard ACAS with suspicion. The result was that in 1979 the chairman of ACAS wrote to the Secretary of State for Employment that the council of ACAS
"cannot satisfactorily operate the statutory recognition procedures as they stand."
My right hon. Friend the Member for Waveney (Mr. Prior) therefore repealed sections 11 to 16 of the Employment Protection Act 1975 in his own Employment Act 1980.
Unfortunately, however, the job was not completed. Section 1(2) of the Employment Protection Act 1975, which still applies, charges ACAS with

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"the general duty of promoting the improvement of industrial relations, and in particular of encouraging the extension of collective bargaining and the development and, where necessary, reform of collective bargaining machinery."
It is the particular duty of ACAS to encourage the extension of collective bargaining which now gives rise to difficulty. ACAS is still obliged to work within the framework of this duty, which is of added significance because it incorporates an official Government view of what is involved in the improvement of industrial relations. Until this section is repealed or amended, the extension of collective bargaining is therefore effectively seen as being the Government's main way of improving industrial relations in this country.
This does not sit happily with the Government's own conviction that the best way for new jobs and new prosperity to be created is to allow enterprise to operate in a climate of opportunity, with employers and employees working together in a spirit of partnership and full cooperation. As the director of social affairs of the Confederation of British Industry commented recently:
"The CBI welcomed the establishment of ACAS but objected most strongly to its terms of reference because of their one-sided emphasis on the extension of collective bargaining."
The CBI objected to them then and has continued to do so since, he concluded.
The statutory duty of ACAS to promote the extension of collective bargaining is unique. None of the labour law legislation since 1970 contains a comparable provision. It is in marked contrast to the Government's own recent Employment Act which seeks to maintain a careful balance between the right to join a trade union and the right not to join. I therefore commend the suggestion made by the Institute of Directors that the statutory terms of reference of ACAS should be modified to remove this partisan and anachronistic statutory duty of ACAS and to take into account a number of trends which are becoming more and more established in this country.
Increasingly, British managers and directors realise that they have a direct responsibility for the management of relations with their employees. Increasingly, they recognise that they should try to communicate directly with each and every employee. At the same time, many employees now understand that their interests are best served by real increases in pay as a result of higher productivity and by the acquisition of new skills. In other words, the two sides of industry which have traditionally been pitted against each other as adversaries are increasingly recognising that the common interest is best served by co-operation.
I therefore propose that ACAS should be charged with a new statutory duty so that it is made responsible for promoting the improvement of employee relations and encouraging mutual respect between employers and employees by means of consultation and co-operation at the place of work. This would be an entirely constructive objective. It would help to give momentum to the entirely welcome voluntary growth in employee consultation schemes which has sprung up during the last five years. It would strengthen the growth in positive employee relations practices which have led, for example, to no-strike agreements, with independent arbitration as a last resort.
It would help both employers and employees to bring the standard of labour relations in their own businesses up
316
to that of the current excellent best standard in this country and would greatly facilitate ACAS to establish itself as a genuinely impartial service available both to employers and to employees. ACAS would gain a new credibility, particularly among employers, with whom its neutrality has been in doubt, and would therefore be strengthened in its mandate to help to undertake the long overdue task of putting British employee relations on the sensible footing that has already been established in the best British companies.
4.18 pm
Mr. Michael Foot: I rise to oppose the motion moved by the hon. Member for Banbury (Mr. Baldry). If there were to be any proposal for altering the constitution and functions of ACAS, it would be advisable not to attempt to do it by means of a private Member's Bill. I shall deal in a moment with the merits or demerits of the hon. Member's proposals, but I should have thought that the whole country was aware of the contribution that ACAS has made to good industrial relations ever since it was established in 1975. Many tributes have been paid to it by all sides of industry, and it is not surprising that that should be so. When ACAS was established—and I was responsible for its establishment—efforts were made to ensure that it had the support of trade unions and employers and of all the different organisations in the country so that it could work successfully.
Ever since its establishment there has been a board, which makes ACAS an absolutely independent body. If it were not an independent body it would not be able to perform its functions of ensuring consultation, of ensuring arbitration and of attempting to establish collective bargaining. None of the functions of ACAS could properly be conducted if its independence were not fully recognised. The Government have understood that point right up to this moment, and I trust that they will vote against the motion when I have made these few remarks on the subject.
It would be a shocking way to deal with an institution which has made, still makes and will make a considerable contribution to good industrial relations to introduce a motion of this character to change its conduct. I hope that all those who want to encourage ACAS to do its job properly and to encourage the independent body that is in charge of ACAS will vote against this proposition.
The hon. Gentleman seeks to remove the emphasis on collective bargaining which ACAS is at present instructed to obey. That does not mean that ACAS is required to consider only collective bargaining. From the beginning we considered that before there was any resort to arbitration, or even to encouraging people to join trade unions, advisory and consultative processes should be available in particular cases. That is why it is called an advisory and consultative body. All those processes are now undertaken by ACAS at every opportunity that it has to do so.
When the parties are eager to have ACAS intervene, it tries to intervene in a dispute before it really begins, as that is the best time to stop it. ACAS is required to uphold the proper principles of collective bargaining and to try to extend them when that can be successfully done, and it would upset the whole balance if that were not so. Except in the one quotation which the hon. Gentleman used from the CBI, no one has suggested that ACAS has not been doing its job properly.

317
If the Government and hon. Members were to support this Bill, they would do considerable injury to the independent status of ACAS and to the work that ACAS is constantly doing. The balance would be readjusted in the most derisory way of all. I hope that the House of Commons, partly because of a recognition of the work that ACAS has done over the 10 years since it was established, partly because of understanding the part that it plays in many disputes, and partly because of the miserable and squalid way in which this proposal has been made, will throw it out. I hope that nobody will think of changing the status of ACAS except by a direct proposition that can properly be examined in advance.
Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 96, Noes 118.

Division No. 157]

[4.25 pm

AYES

Adley, Robert

Key, Robert

Baldry, Tony

Knight, Gregory (Derby N)

Banks, Robert (Harrogate)

Knight, Mrs Jill (Edgbaston)

Beaumont-Dark, Anthony

Lawler, Geoffrey

Bellingham, Henry

Lawrence, Ivan

Best, Keith

Lester, Jim

Bottomley, Mrs Virginia

Lloyd, Ian (Havant)

Bowden, Gerald (Dulwich)

MacKay, Andrew (Berkshire)

Braine, Rt Hon Sir Bernard

Maclean, David John

Brandon-Bravo, Martin

Malone, Gerald

Bright, Graham

Maples, John

Brown, M. (Brigg & Cl'thpes)

Maxwell-Hyslop, Robin

Bruinvels, Peter

Miscampbell, Norman

Bryan, Sir Paul

Monro, Sir Hector

Budgen, Nick

Montgomery, Sir Fergus

Carlisle, Rt Hon M. (W'ton S)

Morris, M. (N'hampton, S)

Chope, Christopher

Morrison, Hon C. (Devizes)

Cockeram, Eric

Murphy, Christopher

Coombs, Simon

Neale, Gerrard

Corrie, John

Ottaway, Richard

Dover, Den

Page, Sir John (Harrow W)

Evennett, David

Parris, Matthew

Eyre, Sir Reginald

Peacock, Mrs Elizabeth

Fookes, Miss Janet

Portillo, Michael

Forsyth, Michael (Stirling)

Powell, Rt Hon J. E. (S Down)

Gardiner, George (Reigate)

Powley, John

Gardner, Sir Edward (Fylde)

Proctor, K, Harvey

Grant, Sir Anthony

Robinson, Mark (N'port W)

Greenway, Harry

Rossi, Sir Hugh

Grist, Ian

Rost, Peter

Hamilton, Neil (Tatton)

Rowe, Andrew

Hanley, Jeremy

Sims, Roger

Hargreaves, Kenneth

Smith, Tim (Beaconsfield)

Harris, David

Spence, John

Hawkins, Sir Paul (SW N'folk)

Spencer, Derek

Hayward, Robert

Stanbrook, Ivor

Hill, James

Stern, Michael

Hirst, Michael

Stewart, Andrew (Sherwood)

Holland, Sir Philip (Gedling)

Taylor, John (Solihull)

Howarth, Gerald (Cannock)

Terlezki, Stefan

Howell, Ralph (N Norfolk)

Thompson, Patrick (N'ich N)

Irving, Charles

Thorne, Neil (Ilford S)

Jessel, Toby

Thornton, Malcolm

Jones, Gwilym (Cardiff N)

Thurnham, Peter

Jones, Robert (W Herts)

Townend, John (Bridlington)

Kershaw, Sir Anthony

Walker, Bill (T'side N)

318

Warren, Kenneth

Yeo, Tim

Whitfield, John

Wiggin, Jerry

Tellers for the Ayes:

Winterton, Mrs Ann

Mr. Roger Gale and

Wood, Timothy

Mr. Christopher Hawkins.

NOES

Anderson, Donald

Loyden, Edward

Archer, Rt Hon Peter

McCartney, Hugh

Banks, Tony (Newham NW)

McDonald, Dr Oonagh

Barron, Kevin

McGuire, Michael

Benn, Tony

McKay, Allen (Penistone)

Bennett, A. (Dent'n & Red'sh)

McKelvey, William

Bermingham, Gerald

Mackenzie, Rt Hon Gregor

Boothroyd, Miss Betty

McNamara, Kevin

Boyes, Roland

McWilliam, John

Bray, Dr Jeremy

Madden, Max

Brown, Gordon (D'f'mline E)

Marek, Dr John

Callaghan, Jim (Heyw'd & M)

Marshall, David (Shettleston)

Campbell-Savours, Dale

Maxton, John

Canavan, Dennis

Maynard, Miss Joan

Clarke, Thomas

Michie, William

Cocks, Rt Hon M. (Bristol S.)

Mikardo, Ian

Coleman, Donald

Millan, Rt Hon Bruce

Concannon, Rt Hon J. D.

Morris, Rt Hon A. (W'shawe)

Conlan, Bernard

Nellist, David

Corbett, Robin

Oakes, Rt Hon Gordon

Cowans, Harry

O'Brien, William

Cunliffe, Lawrence

O'Neill, Martin

Cunningham, Dr John

Park, George

Davies, Ronald (Caerphilly)

Parry, Robert

Davis, Terry (B'ham, H'ge H'l)

Patchett, Terry

Deakins, Eric

Pendry, Tom

Dewar, Donald

Pike, Peter

Dixon, Donald

Radice, Giles

Dobson, Frank

Redmond, M.

Dormand, Jack

Rees, Rt Hon M. (Leeds S)

Douglas, Dick

Richardson, Ms Jo

Dubs, Alfred

Roberts, Allan (Bootle)

Duffy, A. E. P.

Robertson, George

Eastham, Ken

Rogers, Allan

Edwards, Bob (W'h'mpt'n SE)

Rooker, J. W.

Evans, John (St. Helens N)

Rowlands, Ted

Ewing, Harry

Sedgemore, Brian

Flannery, Martin

Sheerman, Barry

Foot, Rt Hon Michael

Sheldon, Rt Hon R.

Forrester, John

Short, Ms Clare (Ladywood)

Fraser, J. (Norwood)

Skinner, Dennis

Godman, Dr Norman

Smith, C.(Isl'ton S & F'bury)

Gourlay, Harry

Smith, Rt Hon J. (M'kl'ds E)

Hamilton, James (M'well N)

Stevens, Lewis (Nuneaton)

Hamilton, W. W. (Central Fife)

Stewart, Rt Hon D. (W Isles)

Harman, Ms Harriet

Strang, Gavin

Harrison, Rt Hon Walter

Straw, Jack

Haynes, Frank

Thomas, Dafydd (Merioneth)

Heffer, Eric S.

Thorne, Stan (Preston)

Hogg, N. (C'nauld & Kilsyth)

Torney, Tom

Home Robertson, John

Wardell, Gareth (Gower)

Hoyle, Douglas

Weetch, Ken

Hughes, Roy (Newport East)

Welsh, Michael

Janner, Hon Greville

White, James

Jones, Barry (Alyn & Deeside)

Williams, Rt Hon A.

Kaufman, Rt Hon Gerald

Woodall, Alec

Lambie, David

Young, David (Bolton SE)

Leadbitter, Ted

Leighton, Ronald

Tellers for the Noes:

Lewis, Terence (Worsley)

Mr. David Winnick and

Lightbown, David

Mr. Jeremy Corbyn.

Question accordingly negatived.

Privilege (Newspaper Report)
4.33 pm
Sir Edward Gardner: I beg to move,
That the report in the Times newspaper of 6th March concerning the draft Report of the Chairman of the Home Affairs Committee on the Special Branches of the police be referred to the Committee of Privileges.
The motion arises from an item in the Times diary on 6 March concerning the draft report of the Chairman of the Select Committee on Home Affairs on the special branches of the police. On Wednesday 20 February copies of the draft report were issued to the 11 members of the Committee and to no one else. The draft report on this highly sensitive and difficult subject has yet to be considered by the Committee.
On Wednesday 6 March, a summary of the draft report appeared under the heading "Special clearance" in the Times diary. I submit that I need hardly satisfy the House that the article is a disclosure of the draft report, because the article itself admits that the report has been "leaked to the Diary". I submit that this disclosure is a clear and serious breach of the rules governing Select Committees.
The article appears to have been intended to embarrass and influence the Committee in its consideration of the draft report. Some might say that it was an attempt to set the cat among the pigeons. I am not suggesting for one moment that the members of the Home Affairs Committee individually or collectively are not strong enough to resist tactics of this kind, but the fact remains that what has been put at risk is something very important—the trust that ought to exist between members of a Committee of this kind.
Mr. Dennis Skinner: It happens all the time.
Sir Edward Gardner: I submit that the article flouts contemptuously the rules of the House regarding the publication of a draft report by a Select Committee.
For those reasons, the matter should be referred to the Committee of Privileges.
4.36 pm
Mr. Brian Sedgemore: In opposing the motion, I am sure that the hon. and learned Member for Fylde (Sir E. Gardner) will know that I personally wish him no ill. There was a famous occasion when we worked together in a murder trial, and to our astonishment our client got off. Some said that it was due to the forensic skills of the hon. and learned Gentleman; others that he so confused the jury that it gave up trying to find out where the truth lay. Anyway, the net result was that that murderer was set free on the streets of London, but that is by the way.
I think that hon. Members on both sides of the House will agree that government by leak is not open government. That applies whether we are dealing with the despicable conduct of Mr. Clive Ponting or the school sneak who has apparently released this document to the Times diary. That is a totally different question from saying that the House should be using its powers of privilege in this matter.
I believe that Select Committees have got themselves into a terrible mess over the issue of privilege, and that it is fair to say that double standards, duplicity and hypocrisy
320
are being used. Although the hon. and learned Member for Fylde is not guilty of any of that, I believe that it is implicit in the very bringing of a privilege motion of this kind.
I think that a lot of the trouble began—I do not want to rake up old feuds—when the Select Committee on Members' Interests was dealing with complaints about the Oman issue last year. At that time, we had reports by Mr. Gordon Greig of the Daily Mail and Mr. Anthony Bevins of The Times which were direct reports of the meetings of the Select Committee on Members' Interests. I wrote to the Clerk to the Committee, Mr. Lankester, pointing this out, and he presented my letters to the Committee, but the Committee, in its wisdom, decided to take no further action. Hon. Members may say that that is all right, but there appears to be one standard for the Select Committee on Members' Interests and another for the Select Committee on Home Affairs.
It was also deeply disturbing, because my hon. Friend the Member for Workington (Mr. Campbell-Savours), although he was not responsible for any of the leaks, was under extreme pressure not to talk about the Select Committee on Members' Interests in public. Yet two distinguished journalists were reporting on the proceedings of the Committee and no action was taken against them.
There was also the curious situation that the Chairman of the Committee, in a radio broadcast, spoke about what the Committee was doing at that time. You ruled, Mr. Speaker, that it was not a prima facie breach of privilege, and, knowing that my place in the sun would eventually come and that I would get my rock cake over tea with you, I accepted your ruling, but I am bound to say that I shall never understand it. However, that is my ignorance rather than your lack of wisdom.
It seems that the whole basis of confidentiality in relation to Committees of this type has broken down, and it will not be re-established by asking journalists on the Times diary questions about the leak that occurred on this occasion. It is clear that we shall not get anywhere with action of that type.
I am a member of the Select Committee on the Treasury and Civil Service. That Committee leaks so much that we could be a Government Department charged with the safe keeping of top secret documents. A few months ago there were leaks to the Financial Times, and a few weeks ago Mr. Anthony Bevins wrote a story about exchange control, based on a report that had not yet come out, and that story subsequently appeared in the Financial Times.
Perhaps we could solve four fifths of the problem by imprisoning Mr. Anthony Bevins. Editors of other newspapers may be asking, "If he has an elixir that enables him to get hold of all these Select Committee reports, what are all the other parliamentary journalists doing? Why can they not get hold of the information?"
We have Select Committees dealing with Members' interests, the Treasury, public accounts — we have problems with that one, but I will not go into those now—and with home affairs. In this case, no member of the Home Affairs Committee has admitted leaking the document. We are therefore chasing journalists. In other words, we are questioning the freedom of the press. We are chasing people who have rights, responsibilities and obligations to their public. Those obligations mean that they cannot keep silent when they get hold of information.
It is preposterous for Parliament to have its own people, whom it cannot trust, and to chase members of the

321
National Union of Journalists. In that respect I declare an interest as an NUJ member. It is the duty of journalists to report—to publish and be damned—and it is absurd for us to take journalists before the Committee of Privileges and to use that great steamroller to deny the freedom of the press.
4.42 pm
Mr. Jeff Rooker: I rise in essence to repeat an apology that I made once before. In 1975 I was responsible, when on the Government Back Benches, for raising under the old rules a matter of privilege concerning The Economist and a draft report to a Select Committee.
The result on that occasion was that the matter went before the Committee of Privileges. That Committee used the blunderbuss of seeking to ban the journalist in question. I urge the hon. and learned Member for Fylde (Sir E. Gardner) to bear that in mind before pursuing the matter further.
My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) was right to say that the House will find itself going after the journalist in question, and nobody else — [HON. MEMBERS: "No."] Hon. Members may deny that, but it is clear that the journalist will not say who gave him or her the report. The source of the information will not be divulged. Thus, the House will be after the journalist, and nobody else.
The only sanction that can be employed—apart from putting the journalist in the Tower or calling him or her before the Bar of the House, which I suspect we shall not do — is to seek to ban the journalist or journalists concerned from the House. We would be a laughing stock if we attempted to do that. There is no justification for proceeding with the type of motion that is now before the House.
I accept that a journalist who gets a report in draft form should not be in possession of it and that a breach of trust must have occurred. But that problem will not be solved by hunting journalists. Indeed, there is no solution to the problem. It is impossible to legislate to create trust between members of Select Committees—I declare an interest in that I have never been a member of a Select Committee—and any lack of trust problem cannot be solved in that way. Thus, what is the hon. and learned Member for Fylde seeking to achieve by taking the matter to the Committee of Privileges?
Mr. Eric Forth rose—
Mr. Rooker: I will not give way, because I am anxious not to delay the House.
If the motion is approved, the result could be to pillory a journalist—[Interruption.]—and that is the reality of the matter. It will not be an hon. Member, a clerk or a typist—perhaps the typist who typed the report—who will be pilloried.
Remembering that the only sanction available in the past has been to ban a journalist from earning his living—the case I have in mind concerning The Economist involved a Mr. Schreiber and somebody else — we should be indulging in a futile exercise which would make us the laughing stock of the nation and the free world. For that reason, I urge the House to reject the motion.
4.45 pm
Mr. Robin Maxwell-Hyslop: Today, unlike on certain occasions in the past, parliamentary
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privilege exists for one purpose only, and that is to enable Parliament to do the job for which its hon. Members have been elected. That must be the test of the application of such sanctions as parliamentary privilege possesses. Thus, the question is whether Select Committees of the House—after the recommendation of the Select Committee on Procedure in 1977–78 was adopted by the House in 1980—are a new way of wasting time, or are among the most valuable assertions of the reality of Parliament, as opposed to the Executive.
If one takes the view that Select Committees are not as much as that but are, nevertheless, a valuable tool by which Back Benchers carry out the job for which they were elected, we must go on to ask whether, if a breach of privilege has occurred — that is a matter for the Committee of Privileges to decide—it is a breach which impairs the functioning of Parliament. That is the aspect to which I wish to refer.
What is known as the Chairman's draft may occasionally be written by the Chairman. In practice, it is written by a combination of the Clerk of the Committee and the specialist advisers, under the guidance of the chairman. That is then presented to the Committee for private discussion.
If at that stage it is released, a question is raised which is important but which would not otherwise matter in the least. Should anybody other than the Chairman be allowed to write the Chairman's draft? If it is to be released in a form in which somebody not elected has written it, then that report—at that stage it has not been adopted by the members of the Committee—will be read by the public as the Chairman's, if not the Committee's, report, when of course it is not.
Unless the House orders—anyone who has served on a Select Committee will appreciate that to do this would be impracticable—that the Chairman's draft is to be written only by the Chairman, the professional servants of the House will be put in an impossible position.
I have been a member of what is now called the Select Committee on Trade and Industry since it came into existence 14 years ago, having been a Sub-Committee of the Select Committee on Public Expenditure. I have never known any member of that Committee criticise the Clerk, who wrote the Chairman's draft, on the grounds that he or she expressed one, rather than another, opinion. The Chairman accepted responsibility for the draft.
To leak a report as if it were the report of elected Members when it is not, is to do a disservice to the readers of the document and to the Select Committee. The confidentiality of the process, leading, in private session, to the report being laid on the Table, is not marginal or peripheral but is essential to the integrity of the Select Committee process.
When the recommendations of the Procedure Committee were laid before the House in 1980, the Government made one important alteration. They proposed that the membership of Select Committees should be agreed between the usual channels—which, translated into English, meant that the Committees would be packed with toadies rather than appointed by the Committee of Selection. A free vote was allowed on that crucially important question because, however good the Standing Orders and the structure, if the Committees were packed with toadies, the whole operation would be worthless ab initio. The House decided then that the Select Committees should be manned by those appointed by the

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Committee of Selection. Since 1980 my observation is not that the reports have been perfect, nor that the recommendations have always been ones with which I agreed, but that the Select Committees have made a most valuable contribution to open government, to better policy formation and, above all, to the accountability of civil servants who had previously not been accountable.
Holding that view, I believe that the integrity of these processes is essential to the effective operation of Select Committees. Therefore, it is necessary to refer this matter to the Privileges Committee and, if the Privileges Committee decides that there has been a breach of privilege, to treat it as a serious matter, coming back to the test with which I started. The sole purpose of privilege is not the aggrandisement of Members of Parliament or indeed of Parliament itself. The sole test must be: does this enable us, is it essential to us, is it important to us in carrying out the task for which we were elected? It is because I believe the answer is, yes, it is important, that the motion should be passed by the House.
4.52 pm
Mr. Michael Foot: I shall come in a moment to the speech of the hon. Member for Tiverton (Mr. Maxwell-Hyslop), but I should like to make one preliminary comment about privilege, arising from the motion moved by the hon. and learned Member for Fylde (Sir E. Gardner). There has been a considerable overhaul of the procedures of the House. Therefore, Members who wish to raise matters of privilege have first to raise the matter with Mr. Speaker. That was an excellent proposal, which was carried almost unanimously by the House when it was brought forward. One of the purposes was to cut down the number of attempts to refer matters to the Select Committee of Privileges.
The authority of the Chamber is protected by that procedure. Because Mr. Speaker rules that a matter is one which, prima facie, should go to the Committee of Privileges, that is not a reason why the House should not reject such a proposal if it wishes. The House of Commons retains the power to reject such a motion if, on grounds of common sense or whatever, it judges that it is advisable to do so. Moreover, the Committee of Privileges does not decide in the end what is a breach of privilege. In the end the matter has to come back to the House.
One of the reasons why I take a different view from the hon. and learned Member for Fylde is that this case will have to come back to the House in the end. It would be much simpler for the House to settle the matter here and now. There can be no doubt that the House now has the power, if it wishes, to settle the question by rejecting the motion. If the House thinks it wise to do so it can settle it in that way, but I understand that there are other arguments.
On the point made by the hon. Member for Tiverton about Select Committees, I am not a great enthusiast for Select Committees, but I am not in favour of sabotaging them by having their documents or discussions leaked before they have reported to the House. I do not wish to interfere in any way with the work that they do. I agree with what the hon. Gentleman said about the valuable work that has been done by many Select Committees, but
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it does not alter the fact that the multiplication of Select Committees increases the problems about publication of their discussions.
There has, of course, been an increase in the number of occasions when there may be a slip between the cup and the lip, or however one may describe it. Between the time when a Committee starts its sittings and its report is available for publication, under the normal authorised process the possibility of slips, leakages or whatever one may call them, or the possibility of journalists finding out what is happening and actually daring to print it in their newspapers, is greatly multiplied.
The fact that there are more Select Committees means that the danger of this kind of development is greatly increased. That is not a reason for not having Select Committees, but it is a reason for having a sensible way of proceeding. If the motion is referred to the Committee of Privileges, and if this is accepted as normal procedure, my fear is that there will be a series of such cases, because we cannot distinguish between one Select Committee and another. I do not believe that we will prevent leakages by this kind of procedure. All that we will do will be to multiply the references to the Committee of Privileges. Far from making privilege an effective force, we will weaken it. Therefore, I ask the House to think carefully before accepting the motion.
Now let us consider what will happen in this case. What applies to members of Select Committees also applies to the Clerks. I am sure that the Clerks serve the House with the utmost ability and loyalty. None of us wishes to put them in an invidious position, but it is right that members of Committees should preserve the secrecy and the agreements that they have made in the Committee. There will be breaches. If there are leakages from the Cabinet, as there are almost every week, there will be leakages from Select Committees. If there are leakages from the Cabinet on matters of major policy that may involve the state, high finance and so on, we cannot say that we expect a much higher standard of every Select Committee. There will still be pressure from the Gallery and from journalists who are doing their job to find out what is happening.
What will be the result? My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) prophesied what will happen, and I agree with him. If this is referred to the Committee of Privileges, it may decide, as some Committees of Privileges have decided in the past, that the only way that it can proceed is to call the editor of the newspaper and say to him, "You must tell us who was responsible for this leakage, because we cannot trace it otherwise." It is likely to come to that, because that has happened previously. When that happens, my prophecy is that the editor of The Times will say to the Committee, "I am very sorry, but I cannot divulge what my journalist has done."
Journalists are protected in the sense that they are under an authority or under their oath to preserve their sources, and especially in the House. If lobby correspondents were to feel free to break their obligations to Members of Parliament, absolute chaos would break out. Everyone knows that almost every day of the week, almost every hour of the day, and almost every minute of the hour conversations are taking place between Members of Parliament and lobby correspondents. If a breach of confidence were to take place, the whole relationship between the House of Commons and the press would be utterly destroyed. If we refer this matter to the Committee

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of Privileges, we will come up against a brick wall. The newspaper will refuse to reveal its sources, and the journalist will say the same, so we will not be able to proceed any further.
In the days of John Wilkes, the House would have sent the journalist to the Tower. However, that did not work very well and eventually that practice was stopped. The House of Commons did not do that with good grace, but eventually accepted that it did not work and that it had to be stopped. Why do we not learn from that experience and accept that referring the matter to the Committee of Privileges will not work, so we had better give up now?
If we do not oppose the motion, when we come up against that brick wall and the matter is referred back to the House, we will have this debate again, except that we will be faced with the facts which we are now trying to present to the House. It is better to deal with the matter now.
It is, of course, right that these matters should be aired, especially as we have a new system of procedure, new Select Committees and new things happening in the House. Therefore, it is proper for us to discuss the relationship between this House and the journalists in the Press Gallery. The more that we look at the matter, the more we will find that it will cause only ruptures between this House and the press if we try to enforce the authority of the House through the Committee of Privileges.
That does not mean that I am in favour of people leaking information. I am not in favour of people leaking information from Select Committees or from the Cabinet. I am not even in favour of Speakers leaking conversations that they had when they were in office. These are matters of honour, and that is the way that they should be handled in the House. If the House says that there is no honour between Members of Parliament and journalists, the House will destroy the relationship between Members of Parliament and journalists. I urge the House not to embark on that course.
5.2 pm
Mr. Ivor Stanbrook: I believe that this House and the country as a whole pay exaggerated and undue respect to the reports of Select Committees. A dozen or so hon. Members, chosen more or less at random, cannot possibly, in their reports, give the distilled wisdom of 650 hon. Members. Therefore, they are often not representative of the House. In addition—and it applies to the matter that we are discussing—all the evidence on which the report is based has been published.
Those who draft the first draft of a report fulfil a useful function. It enables other members of the Committee to focus upon the issues. By participating in discussion about it and its details, we can eventually marshall the arguments, summarise the facts and serve the House on a national issue. For that reason, we should not pass over lightly a breach of trust and honour. We must not do that, for the sake of the House. There must be a sanction against that sort of thing, and surely that sanction is to refer the matter to the Committee of Privileges, which is all that the motion suggests.
The motion does not suggest that the victims of any investigation should necessarily be the press. That is not the point. The point is that an investigation is necessary, because the members of the Select Committee concerned know that only 11 hon. Members had copies of the report. Therefore, one of us is responsible for handing it over to
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The Times. That cannot possibly be denied. To try to gainsay that at this stage is to bring into the arena the honesty and honour of the professional staff who serve this House. It would not be right to leave the matter there.
We know that one hon. Member actually revealed a document which he was under a duty of trust and honour not to reveal. Therefore, it is a matter of common sense. We do not need any special pleading on behalf of the press from the right hon. Member for Blaenau Gwent (Mr. Foot) or anyone else. It is truth, honesty and decency that count, which is why we should refer the matter to the Committee of Privileges.
5.5 pm
Mr. D. N. Campbell-Savours: This matter should, without doubt, be referred to the Committee of Privileges—in regard not to a newspaper, but to an hon. Member. The motion does not refer to an hon. Member.
My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) said that the House could divide on the motion. In doing so, it would be dividing against your judgment, Mr. Speaker. [HON. MEMBERS: "No."] Perhaps you would clarify the matter, Mr. Speaker.
Mr. Speaker: I think that I can put the hon. Gentleman right. All that I have done is to give the matter precedence on today's Order Paper.
Mr. Campbell-Savours: I made my remarks advisedly, because the difference between this application and others is that you have given it precedence. Therefore, you are expressing the view that the matter should be dealt with. [HON. MEMBERS: "No."] When we read the record of the debate, others might also draw that conclusion.
Mr. Speaker: Order. The hon. Gentleman should not put words into my mouth or thoughts into my head. I have given the House an opportunity to decide the matter
Mr. Campbell-Savours: I am interested in consistency. Two weeks ago The Guardian published an article containing a statement about the deliberations of a Committee of the House. The journalist inadvertently made that statement because he was not aware that he was, to some extent, breaching the privilege of the House. It is ludicrous for us to pursue a journalist or a newspaper when it is obvious that a journalist, having accepted copy in good faith, has then published it in good faith. He did not know that the copy that he was submitting for publication referred to the deliberations of a Committee.
The journalist who wrote The Times diary may or may not have known about breach of privilege. We cannot be sure. If the Committee pursues the matter in the way that has been suggested, the danger is that the question of privilege may be raised whether or not the journalist knew about the deliberations of the Committee. It might be that the deliberations were in public. A journalist must not be put in a position where he has to decide on privilege. He is not required to understand fully the proceedings and procedure of the House.
If we penalise The Times, it means that any journalist writing anything about comments or statements emanating from the House would, technically, have to check in advance and be assured that the matter was or was not privileged and therefore could or could not be published. It is wrong to place an unnecessary responsibility on a journalist. If he commented on matters raised in the

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House, but he was not in the Press Gallery and did not have an understanding of the procedures, he would be placed in a difficult position.
In my view, the motion should go for an hon. Member as an hon. Member appears to have breached the privilege of the House. He or she made a statement to a journalist. However, the motion does not do so. Therefore, I submit that the motion should be withdrawn, or that, if it is not withdrawn during the course of the debate, we should vote against it.
5.10 pm
Sir Ian Gilmour: The hon. Member for Workington (Mr. Campbell-Savours) says that he is interested in consistency. I believe that whenever the House gets on its high horse over a matter of privilege it consistently makes a fool of itself.
We must consider the precedents and make one obvious distinction. It is plain that whoever leaked the report was in error, dishonourable and guilty of a breach of trust. It is equally true that the journalist who printed the report was not guilty of any of those things. He was simply perfoming his duty as a journalist and was entirely within his rights. It would be totally wrong for the House to give the impression that it was critical of a person who was doing his duty. If we pass the motion, we shall be in danger of failing to make that important distinction.
This is a relatively unimportant matter which should not go before the Committee of Privileges. It seems clear that a member of the Select Committee was at fault. Should not the matter be investigated by the Select Committee itself?
5.12 pm
Mr. A. J. Beith: Unusually in these days, I find myself in disagreement with the right hon. Member for Chesham and Amersham (Sir I Gilmour). There is a reference to The Times in the motion only because the appearance of the report in The Times is the sole evidence that a breach of privilege may have occurred. There is no charge against The Times. Whether, how and why a breach of privilege took place must be a matter for the Committee of Privileges to investigate, if the House decides to refer the matter to the Committee. If no report had appeared, there would be nothing for us to discuss.
The matter is not unimportant. Our Select Committees are an important and necessary, if imperfect, means of extending our scrutiny of and control over the Executive. I believe that it was desirable for the Home Affairs Select Committee to investigate the special branches of the police. I am on record as arguing that some Committee of the House—perhaps a smaller one—should investigate other security matters. The incident under discussion does not help me to put that case.
I believe that Committees must have some means of asserting the importance of confidentiality, both in relation to the nature of the subjects that they discuss and because they should have a means of carrying out their discussions in the way that some hon. Members have described. For example, the members of a Committee should be able to assent to the preparation of a report on a certain set of propositions, some of which they may subsequently vote down. That procedure makes it possible for a certain set of proposals to become a focus for discussion. It is
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common practice in Select Committees for members to agree that a series of propositions should be placed before them in complete form so that they can be amended or voted down. That is a means of carrying forward the discussion. If such reports are to be leaked, that sensible course of discussion cannot be pursued. That is another reason why we should protect the confidentiality of the Committees.
Some hon. Members have pleaded earnestly on behalf of journalists, who they fear may be imperilled if we accept the motion. I do not share that fear. Moreover, there has been no sense in those speeches that those hon. Members are reaching out for a better remedy for what I regard as a serious impediment to the work of Select Committees. In engaging in special pleading, some hon. Members have failed to show that they take as seriously as they should the importance of the need to maintain confidentiality.
The House has, at the moment, only one means to hand of showing its displeasure, and that is to refer the matter to the Committee of Privileges. That action will have no necessary and immediate consequence. Mr. Rupert Murdoch will not find himself in the Tower—although if that were in prospect the proposition might attract more votes. All that we would secure is that the Committee of Priviliges would consider the matter and exercise its judgment — the Committee includes many able and experienced hon. Members — to make sure that a sensible course is followed. That is not much to ask as a way of insisting that the Select Committees should enjoy confidentiality.
5.15 pm
Miss Janet Fookes: I agree with much of what has been said by the hon. Member for Berwick-upon-Tweed (Mr. Beith). We must bear in mind that Select Committees engage in public discussion when they are taking evidence and that when the report is completed it again becomes public. It is open to members of the Committee, if they so wish, to sign a minority report or to make reservations. It therefore seems unreasonable not to allow a Committee a period of confidentiality while it is engaged in chewing over possibilities for inclusion in the report.
Mr. Gordon A. T. Bagier: The hon. Lady has the facts slightly wrong. One cannot produce a minority report in a Select Committee.
Miss Fookes: It is, however, possible to record dissent.
It is not unreasonable to allow a period of confidentiality—usually relatively brief—during which the members of the Committee may hammer out the contents of the report. That is why it is so bad that a report should have been leaked.
I am not much concerned about the fact that the press picked up the report, whether from a noble sense of duty or because it seemed to be a juicy morsel of information that might help to sell more newspapers. I am more concerned about the unpleasant feeling that members of the Committee experience when they cannot trust their colleagues. That is at the heart of the argument.
We work in Committee as members of various parties. We work together despite our political differences. If we have to look over our shoulders and wonder whether we can trust X, Y or Z, it will be far more difficult for us to carry out our work.

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I regret very much what has occurred. Whoever leaked the information would do the House a service if he were prepared to do the honourable thing and own up frankly.
5.18 pm
Mr. David Winnick: I am not sure whether it is a coincidence that this debate follows our debate yesterday, but we certainly seem frequently now to find ourselves discussing security, and I have no complaint to make about that.
I am a member of the Select Committee in question. I hope that if I had leaked the information I would have enough guts to stand up on the Floor of the House and admit it. If I say that I did not do so, it is up to Conservative Members to decide whether they believe me. Those who know me know that I do not lack the courage to defend what I have done, whether in the case of a leak or anything else.
I am an innocent party, but I cannot deny that there was a leak and a breach of confidence. Setting aside the question whether the material should have been leaked, I do not think that the action made much political sense. However, it happened.
However, leaks are hardly unknown, as my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) has said. I understand that there were a few leaks from the Home Affairs Select Committee in the previous Parliament, although they might not have been of the earliest draft report, as in this case. As far as I am aware, no motion such as this appeared on the Order Paper then.
No useful purpose would be served by taking this matter further. It is not the House's function to give the impression that we are over-sensitive. No purpose either would be served by giving the impression that, because the report appeared originally in The Times and then, somewhat later, in The Guardian, civilisation as we know it is coming to an end. This is not such an important matter. As others have said, if there is discord in a Committee, that is a matter for members of that Committee. I do not know whether the hon. and learned Member for Fylde (Sir E. Gardner) agrees. I expected an item on the Committee agenda concerning the leak. The issue is given an importance which it does not deserve by bringing it up on the Floor of the House and, if the motion is accepted, referring it to the Committee of Privileges.
I agree that the journalist should not be blamed. It is not the journalist's job to decide whether a matter is confidential. It is an odd journalist who would say, "I cannot handle this material because it is confidential and has not yet been considered by the Committee." The journalist has carried out his duty and there is no reason to criticise him. The person to blame is the hon. Member who leaked the information. I doubt whether the offending person was the Committee Clerk, so an hon. Member must have done it.
It is foolish to believe that journalists were not aware of the differences of opinion in the Committee, on the evidence of our public sessions, about the approach to the inquiry into the special branch. If we have differences of opinion on the Floor of the House, it is foolish to imagine that they will disappear in Committee when we are considering a sensitive and controversial matter such as the special branch. Any journalist who followed our proceedings must have known that there was unlikely to be a unanimous report.
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The best thing to do in the circumstances is to note what has occurred. Members of the Select Committee can decide to regret or deplore a leak. It would be quite wrong to send the matter to the Committee of Privileges. We should not find out the identity of the culprit, who would probably not wish to own up. As the journalist is not likely to be dealt with critically, because we all seem to agree that he was not at fault, it would be a waste of time to accept the motion.
Mr. Anthony Beaumont-Dark: On a point of order, Mr. Speaker. Have we not flogged this horse to death? Are we to debate this trivial matter all afternoon when we have other, more important, matters to discuss?
Mr. Speaker: This is a matter for the House. Many hon. Members are rising in their places.
5.24 pm
Mr. Cranley Onslow: I do not wish to delay the House. Unusually, I find myself in some agreement with the hon. Member for Walsall, North (Mr. Winnick). The matter should not be referred to the Committee of Privileges because we want to make a scapegoat of The Times or to have a witch hunt against a journalist. Some journalist has had something stuffed into his pocket and, naturally enough, he has put it in his newspaper. There is nothing strange about that. Anyone who thinks differently is naive.
Equally, anyone who supposes that no hon. Member has committed an act of dishonour is being naive. I do not understand how hon. Members think that it would be possible for Select Committees to work if we tolerated members of those Committees behaving dishonourably to each other. The Committee of Privileges should address itself to that fact. If it is established that there has been an act of dishonour by an hon. Member, or by an hon. Member who cannot be identified, I hope that the Committee will present some recommendations to the House on how hon. Members might be put on their honour before they are appointed to Committees. Unless we go to that length, we shall have wasted our time.
5.25 pm
Ms. Clare Short: This is the first time that I have heard the House discuss its privileges, and I must say that I am not impressed. There is an awful air of pomposity. The House is putting through legislation endorsing policies that are smashing up the lives of most people in the country. Hon. Members are not concerned about honour or truth in those matters. That is just a personal comment.
I am a member of the Home Affairs Select Committee and I oppose the motion—but not out of any disrespect of that Committee's Chairman, although I am surprised and regret that he has moved it. I greatly like all his qualities except his political views. No disrespect is intended in what I have said.
The Select Committee's inquiry has drawn great public attention but it has been clear in several of its hearings that it is divided on party lines. It is also well known, and has been reported in the press, that Conservative members of the Committee have deliberately brought the inquiry to a premature conclusion because they want to stifle it and that Labour members of the Committee want other witnesses to be brought before the Committee.

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Nothing in the leak brings the Committee into disrepute, embarrasses anyone or puts pressure on anyone. That was the claim of the hon. and learned Member for Fylde (Sir E. Gardner), and it would be a serious matter. Everyone who has followed the inquiry knows how the Committee is divided. Perhaps I might inform the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that the line taken in the report that was leaked was discussed by the Committee. It was not a draft that had been prepared by the Clerk to the Committee without there having been political discussion. I thought that the hon. Gentleman might like to know that, as he rested much of his argument on the need to protect Clerks to the Committee because of the assumption that they had prepared a draft. That is not the case here.
It was not me who leaked the document. [Interruption.] If I had thought that it would benefit the public or improve our security services or their accountability, I should have leaked it, but I did not. The evidence for that is that, if I want to leak anything, I should not leak it to a disreputable newspaper such as The Times has now become. I used to take that newspaper. Although I did not endorse its political views, I had some regard for the objectivity of its reporting. I cancelled my order some time ago and I have no such regard for it now.
The leak is entirely accurate, as anyone who has followed the proceedings of the Committee knows. Those members of the Committee who want prematurely to end the inquiry by not calling witnesses whom Labour members of the Committee want to call are breaching trust and bringing the Committee into disrepute. The complaint that the leak has done serious harm to the Committee, its members or the House is nonsense, and the motion should be dismissed.
5.30 pm
Mr. Dennis Skinner: I do not serve on this or any Select Committee, but having listened to the debate I am beginning to think that a bit of leaking is not a bad idea. I shall not join a Select Committee, but if any Member wishes to pass me any information, I assure him that I have several contacts. They may not work for The Times, but instead the stories could appear in Tribune or Labour Weekly. Neither of those publications has a large circulation, but it is possible that the article could be picked up by others.
This debate has revealed the fraying edges of privilege in this House. In a way I am pleased that it has taken place, because I have always hated the idea of privilege. Many hon. Members who have spoken, even some Conservative Members who want to send this motion to the Committee of Privileges, have done so in an extremely ambiguous manner. Some have been ultra-defensive and have almost admitted, "We will send it, but nothing will happen when it gets there." The hon. and learned Member for Fylde (Sir. E. Gardner), who, according to my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), got a murderer off by bamboozling the jury, has done it again today. He has introduced a motion, but does not know who he is attacking. He thinks he is after an Opposition Member, but given that the Government have a majority on the Select Committee, it could be a Tory. The hon. and learned Gentleman could have put up the classic defence. It could be him.
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I am not even sure about the hon. Member for Orpington (Mr. Stanbrook). He was quick to rise to his feet and say, "Not me, Mr. Speaker." We shall need the pink panther to solve this one, and any inquiry could run longer than "The Mousetrap", the Agatha Christie play which is now running in a Strand theatre.
This is all nonsense. We are told that this Committee will cost money and that staff will have to be employed, yet people are dying of hypothermia. Every day the Government complain that they do not have money for this, that or the other. The Prime Minister is always saying that the Government have no money—that it belongs to the taxpayer.
Mr. Anthony Beaumont-Dark: Sit down while you're ahead.
Mr. Skinner: The hon. Gentleman is not ahead. He has only just walked into the Chamber.
Passing this motion will be a waste of time. Will the 11 members of this Select Committee be grilled? Will their phones be tapped? Will the special branch be brought in? If the Leader of the House has any sense—I am told that he has a bit—he will say,"We have heard enough." He will take the advice of my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) and others, and throw this motion in the dustbin with all the other privilege which abounds in this place.
5.34 pm
Mr. Robin Corbett: Follow that!
The hon. and learned Member for Fylde (Sir. E. Gardner) acknowledged the possibility that this alleged leak could have been an attempt to influence the Committee, but he added that he did not believe that the Committee was likely to be damaged by it in any way. Therefore, what damage has this alleged leak done, except to our amour propre? In my view, what has allegedly taken place is in no way serious enough to warrant the motion.
I am a member of the Committee. I am also a journalist. I know that journalists are paid to discover things which other people do not want them to discover and to report their findings in their newspapers.
The hon. Member for Plymouth, Drake (Miss Fookes), who is also a member of the Committee—I hope that she will not think that I am being offensive—made the mistake of assuming that if a leak has taken place, it must have been by a member of the Committee. That is the same mistake as assuming that simply because a report appeared in The Times, it must have been written by a member of the staff of The Times. That is not necessarily so, because, as the hon. Member for Orpington (Mr. Stanbrook) said, all the Committee's evidence has been published. Even someone masquerading as a journalist on a comic called The Sun and reading through the evidence would not need A-levels or a university degree to draw certain conclusions about what kind of report might come out of that evidence. One does not need to be clever to do that. All the evidence has been published, and anyone with the time and diligence could have arrived at the conclusions which allegedly appear in the article in The Times.
Why do we hear about privilege only when matters to which hon. Members take exception appear in newspapers? Last weekend The Sunday Times told us that Sir Antony Duff was to be the new boss of the security

333
services. Last night a junior Minister from the Home Office told the House that there was to be a new boss of the security services and that he had been appointed two months ago, but, so far as I know, no hon. Member has introduced a privilege motion on that matter.
Most of the Sunday newspapers carried stories that the Government would introduce a minimum prescription charge of £2 per item. I know, Mr. Speaker, that you will take the view that information of that kind most properly belongs to this House and should have been announced in the House first by the Secretary of State, yet no one is shouting "privilege" over that.
As my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) said, every day of the week members of the press lobby are wheeled over to 10 Downing Street and fed goodies which fly in the face of proper respect for this House, but apparently no one cares a jot or tittle. All we have is the occasional complaint that press releases are available in the Press Gallery before a statement is made.
I have already said that I am a member of the Committee, but I have no intention of saying whether I did or did not make any alleged leak. This House is not a court or a court martial. We are not here for that purpose. My colleagues, who have said that they did not make the leak, are, I believe, wrong. That is the way in which an American gentleman called McCarthy worked. We are taking ourselves far too seriously. I urge the hon. and learned Member for Fylde to withdraw his motion.
5.38 pm
Mr. Terence Higgins: I believe profoundly that the work of the departmental Select Committees is of the greatest importance. Moreover, I believe that the institutional reforms that we have made have been important in adjusting the balance between the Executive and Parliament. That being so, anything which undermines the work of those Committees is a very serious matter. In that respect, I agree very much with the views expressed by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop).
Certainly it seems to me that this is a House of Commons matter and not a partisan matter in terms of the action that should be taken in matters of this kind. The right hon. Member for Blaenau Gwent (Mr. Foot) set out very clearly the problems that may arise if we agree to the motion, but he offered absolutely no solution to the basic problem. We must face the fact that leaks of the kind referred to by my hon. and learned Friend the Member for Fylde (Sir E. Gardner) damage the work of Select Committees. That is certainly so if a final report appears in the press in advance of publication and laying before the House. The impact of the report when it is finally published is inevitably diminished.
More important, in cases of this kind damage is done if reports appear in the press of working documents or proceedings of a Committee. A working document—a Chairman's draft report, for example—has no authority whatever. It is not endorsed in any way as representing the views of members of the Committee or of the Committee as a whole. Yet the leaked report—for example, the one that we are now considering — seeks to give some credence to the views expressed in the draft report or in a report of discussions that have taken place.
334
Regrettably, a member of the Committee, or, indeed, the journalist concerned or the staff or others involved in the work of the Committee, may seek to promote a particular view through a leak of this kind—
Mr. Skinner: So what?
Mr. Higgins: The hon. Gentleman asks, "So what?" It is usurping the authority of the Committee to suggest that the Committee holds a particular view when that is not the case. Therefore, I believe that we should take action in this instance and on the more general issue involved.
This is not a question of excessive secrecy or of something being concealed indefinitely. It is purely and simply a question of whether the information should be made known before the report is published. As has been pointed out, there is no such thing as a minority report from a Select Committee. Nevertheless, any member of a Select Committee with a dissenting view may have that recorded in the proceedings and when the report is published it is abundantly clear what has taken place.
Another point should be considered carefully. Virtually all the leaks that have taken place have concerned proceedings, draft reports and the like. Once that is allowed to happen, some doubt must be cast on the confidentiality of the information given to the Select Committee. That is extremely dangerous, because the work of the Committees would most certainly be inhibited if the Government or outside bodies could say—perhaps on a matter of commercial sensitivity—that they will not give the information to the Committee because it might be leaked and damage them. That is a matter of considerable concern. Therefore, we must take a stand.
Mr. Winnick: As I said earlier, no one could deny that there was a breach of confidence, but what will be the result of the action proposed? Will the Committee of Privileges produce a conclusion or recommendation that will actually prevent leaks in the future?
Mr. Higgins: That is why this reference is so important. We have to know what is likely to happen in cases of this kind.
In discussing the matter with members of the parliamentary press lobby I was surprised to discover that some of them were not fully aware, or indeed aware at all, of the extent to which the House has powers with regard to privilege. This is not a matter of being over-sensitive or pompous but of whether we have a system that allows us to work effectively. That is the crucial issue. Some members of the lobby seem to be unaware of the situation, so they may print things of this kind inadvertently. If nothing else, this debate will help to clarify the position. Others may be well aware of the rules but continue to publish these things all the same.
I fully accept that if we refer this matter to the Committee of Privileges it may be very difficult for that Committee to ascertain who was responsible for the leak. I take the point made by the hon. Member for Birmingham, Erdington (Mr. Corbett), that it may not be a matter of a Member of the House acting dishonourably. The papers may somehow have fallen into the wrong hands. It may have been a member of the staff or someone else involved in the work of the Committee. That is a matter that the Committee of Privileges should investigate.
The more difficult matter that we shall have to consider, and which the Committee of Privileges will have to

335
consider first, is the issue raised by my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour). Even if we cannot ascertain who was responsible for the particular leak, we must consider whether some action should be taken in relation to the press. In that context, I am bound to say that I suspect that there would be far fewer leaks from Select Committees if it were clearly understood that such leaks could not be published in the press.
Mr. Robert Kilroy-Silk: I am chairman of the all-party parliamentary group on penal affairs. In the past six years we have published half a dozen major reports, each of them as complex and potentially controversial as the reports published by any Select Committee. There are Members in the Chamber now, on both sides, who have contributed to the working parties on those reports, but there has never been a leak although there was never any question of the sanction of privilege being used against any Member of Parliament or member of the press. To me, that is clear evidence that what is needed is not the sanction of the blunderbuss of privilege but the trust that exists among Members of all parties in the House. Without that trust, it does not matter whether we have privilege or whether sanctions can be imposed.
Mr. Higgins: I entirely accept that trust among members of the Committees is of the greatest importance. That is not in dispute. In my view, however, to ensure that the work of the Committees and the business of the House is not undermined, it is extremely important to make clear the rules concerning the printing of alleged or actual reports. I believe that it is important for the Committee of Privileges to consider the matter and to make clear what the rules are in respect of the press. It would also be very helpful to consider what should be the appropriate penalties for such breaches of privilege.
As I have said, it is not a matter of being pompous or over-sensitive. I am desperately concerned that the work of the Committees, which I believe to be of such great value, should not be undermined by leaks of this kind. Therefore, I strongly support the motion.
5.58 pm
Mr. Alan Williams: It is clear that there is considerable disquiet on both sides of the House about the fact that we could be in danger of creating scapegoats of journalists.
It is worth reminding the House that we are saying not that there has been a breach, but that there appears to have been a breach and that it should be investigated. We are not saying to the Committee of Privileges, "Take away those who are guilty and punish them." We are saying, "Establish the nature of the offence and make recommendations to the House." At the end of the day, it will still be for the House to decide the appropriate action.
It may seem rather simplistic, but I believe that if the House has rules it should abide by them or it should conscientiously abandon or modify them. It should not be left as a matter of individual default. If the rules are fraying at the edges, as my hon. Friend the Member for Bolsover (Mr. Skinner) said—it is clear that this is a general feeling—it would be appropriate for the Committee of Privileges to consider whether the garment of our
336
procedures is reparable. I hope that the Committee will take account of the misgivings expressed today about the danger that we could end up condemning the wrong target.
The newspaper was fulfilling its role by publishing the news as it saw and obtained it. The real culprit is probably a Member of the House. I make no apology for saying "culprit", because I believe that the Select Committees have been a valuable addition to the role of the Back Bencher. The capability of the House of Commons to interrogate the Executive has been made far stronger by the creation of the Select Committees, many of which have shown considerable independence. It is a pity that the culprit is in danger of going scot-free, skulking dishonourably, as he does, behind the hope that the journalists will conduct themselves with greater honour in not disclosing his name than he did in disclosing the contents of the report. Whoever is responsible is lacking not just in personal courage, but in consideration to his colleagues in the House—
Ms. Clare Short: Or she.
Mr. Williams: —because, in the process of indulging in the decision to ignore the rules of the House, he, or she—I do not wish to exclude my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) or any others from my comments—has cast doubts on the integrity of everyone else who had access to those documents—not just hon. Members, but the servants of the House. It must be a matter of considerable disquiet and concern to them when blame is attributed.
Therefore, I support the motion. However, I hope that, in the light of the debate, the Committee of Privileges will feel able to consider, in addition to the actual remit before it, the appropriateness and relevance of the procedures of the House as they now stand.
5.52 pm
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) felt that proper regard and protection was not being given to local authority financial matters which will be considered next. I understand at once his anxiety, but I ask for his tolerance.
The House has been considering a matter of lively concern, touching on the relationships with the departmental Select Committees and on the honour and integrity of hon. Members and their relationship with the world outside, especially Fleet street. All that is embraced within this procedure motion. As the right hon. Member for Swansea, West (Mr. Williams) has properly pointed out, it is merely a question of whether we refer the matter to the Privileges Committee for adjudication or withhold the facility that is sought by my hon. and learned Friend the Member for Fylde (Sir E. Gardner).
I have always believed it to be my role in these debates to speak but briefly and to bring matters to a conclusion. I shall therefore not dwell upon the merits that have been eloquently argued, except to say that I have felt a strong emotional sympathy with the points argued by the right hon. Member for Blaenau Gwent (Mr. Foot), for these are dangerous times. The right hon. Gentleman suggested that the House could be in grave danger of making a total fool of itself in these matters. That is a danger that permanently attends the House. We must therefore attend to the right hon. Gentleman's words with particular care.

337
It is perfectly true that there are dangers of arousing expectations that cannot conceivably be fulfilled. I suspect that gone for ever are the days when John Junor stood at the Bar of the House to be admonished by a suitably outraged House of Commons.
Mr. Kilroy-Silk: Bring them back.
Mr. Biffen: The true reactionary opposite says, "Bring back that situation." I am a product of evolution. I know that that situation is beyond likely recall.
Because one cannot have totality of expectation, that does not mean that one can have no expectation at all. The question of privilege, as with so much else that concerns the House, is a question of graduated response, graduated ability and, above all, graduated expectation. The rules by which we operate run to much more than the mere Orders of the House, regulations or what you will; there are conventions that sustain our behaviour every bit as much as formal rules. The part played by privilege and the Privileges Committee and the judgment that the House forms with the Privileges Committee can have a real effect upon the conventions no less than upon the rules of the House. In that spirit of qualified and modified expectation, I wish my hon. and learned Friend the Member for Fylde well and commend his motion to the House.
Question put:—
The House divided: Ayes 268, Noes 109.

Division No. 158]

[5.56 pm

AYES

Alexander, Richard

Cockeram, Eric

Alton, David

Coleman, Donald

Ancram, Michael

Colvin, Michael

Ashby, David

Coombs, Simon

Atkins, Rt Hon Sir H.

Cope, John

Atkins, Robert (South Ribble)

Corrie, John

Atkinson, David (B'm'th E)

Couchman, James

Bagier, Gordon A. T.

Crouch, David

Baker, Rt Hon K. (Mole Vall'y)

Currie, Mrs Edwina

Baker, Nicholas (N Dorset)

Douglas-Hamilton, Lord J.

Baldry, Tony

Dover, Den

Banks, Robert (Harrogate)

Dunn, Robert

Batiste, Spencer

Durant, Tony

Beaumont-Dark, Anthony

Dykes, Hugh

Beith, A. J.

Edwards, Rt Hon N. (P'broke)

Bellingham, Henry

Evennett, David

Bendall, Vivian

Eyre, Sir Reginald

Best, Keith

Fallon, Michael

Bevan, David Gilroy

Farr, Sir John

Biffen, Rt Hon John

Fenner, Mrs Peggy

Boscawen, Hon Robert

Fletcher, Alexander

Bottomley, Peter

Fookes, Miss Janet

Bottomley, Mrs Virginia

Forman, Nigel

Bowden, Gerald (Dulwich)

Forth, Eric

Braine, Rt Hon Sir Bernard

Franks, Cecil

Brandon-Bravo, Martin

Fraser, Peter (Angus East)

Brinton, Tim

Freeman, Roger

Brittan, Rt Hon Leon

Freud, Clement

Brooke, Hon Peter

Fry, Peter

Brown, M. (Brigg & Cl'thpes)

Gale, Roger

Browne, John

Galley, Roy

Bruinvels, Peter

Gardiner, George (Reigate)

Buck, Sir Antony

Gardner, Sir Edward (Fylde)

Budgen, Nick

Garel-Jones, Tristan

Burt, Alistair

Goodhart, Sir Philip

Butler, Hon Adam

Gorst, John

Carlile, Alexander (Montg'y)

Gow, Ian

Cartwright, John

Gower, Sir Raymond

Cash, William

Grant, Sir Anthony

Channon, Rt Hon Paul

Greenway, Harry

Chope, Christopher

Grylls, Michael

Clark, Hon A. (Plym'th S'n)

Hamilton, Hon A. (Epsom)

Clark, Sir W. (Croydon S)

Hamilton, Neil (Tatton)

Clarke, Rt Hon K. (Rushcliffe)

Hannam, John

338

Hargreaves, Kenneth

Monro, Sir Hector

Harris, David

Montgomery, Sir Fergus

Harvey, Robert

Moore, John

Haselhurst, Alan

Morris, Rt Hon J. (Aberavon)

Hawkins, Sir Paul (SW N'folk)

Morris, M. (N'hampton, S)

Hawksley, Warren

Morrison, Hon P. (Chester)

Hayes, J.

Murphy, Christopher

Hayhoe, Barney

Neale, Gerrard

Hayward, Robert

Needham, Richard

Henderson, Barry

Neubert, Michael

Hickmet, Richard

Nicholls, Patrick

Hicks, Robert

Onslow, Cranley

Higgins, Rt Hon Terence L.

Oppenheim, Phillip

Hill, James

Ottaway, Richard

Hirst, Michael

Page, Sir John (Harrow W)

Holland, Sir Philip (Gedling)

Page, Richard (Herts SW)

Hordern, Peter

Parkinson, Rt Hon Cecil

Howarth, Alan (Stratf'd-on-A)

Parris, Matthew

Howell, Ralph (N Norfolk)

Patten, Christopher (Bath)

Hughes, Simon (Southwark)

Pattie, Geoffrey

Hunt, David (Wirral)

Pawsey, James

Hunt, John (Ravensbourne)

Peacock, Mrs Elizabeth

Hunter, Andrew

Penhaligon, David

Irving, Charles

Pollock, Alexander

Jenkin, Rt Hon Patrick

Portillo, Michael

Jessel, Toby

Powell, Rt Hon J. E. (S Down)

Johnson Smith, Sir Geoffrey

Powell, William (Corby)

Jones, Gwilym (Cardiff N)

Powley, John

Jones, Robert (W Herts)

Price, Sir David

Joseph, Rt Hon Sir Keith

Proctor, K. Harvey

Kennedy, Charles

Rathbone, Tim

Kershaw, Sir Anthony

Rees, Rt Hon Peter (Dover)

Key, Robert

Renton, Tim

King, Roger (B'ham N'field)

Rhodes James, Robert

King, Rt Hon Tom

Rhys Williams, Sir Brandon

Kirkwood, Archy

Ridley, Rt Hon Nicholas

Knight, Gregory (Derby N)

Roberts, Wyn (Conwy)

Knight, Mrs Jill (Edgbaston)

Robinson, Mark (N'port W)

Knowles, Michael

Roe, Mrs Marion

Knox, David

Ross, Wm. (Londonderry)

Lamont, Norman

Rossi, Sir Hugh

Lang, Ian

Rost, Peter

Latham, Michael

Rowe, Andrew

Lawler, Geoffrey

Rumbold, Mrs Angela

Lawrence, Ivan

Ryder, Richard

Lawson, Rt Hon Nigel

Sainsbury, Hon Timothy

Lee, John (Pendle)

Scott, Nicholas

Lennox-Boyd, Hon Mark

Shaw, Sir Michael (Scarb')

Lightbown, David

Shersby, Michael

Lilley, Peter

Sims, Roger

Lloyd, Ian (Havant)

Skeet, T. H. H.

Lloyd, Peter, (Fareham)

Speed, Keith

Lord, Michael

Spence, John

Lyell, Nicholas

Spencer, Derek

McCrindle, Robert

Spicer, Michael (S Worcs)

McCurley, Mrs Anna

Stanbrook, Ivor

Macfarlane, Neil

Steen, Anthony

MacGregor, John

Stern, Michael

MacKay, Andrew (Berkshire)

Stevens, Lewis (Nuneaton)

MacKay, John (Argyll & Bute)

Stewart, Allan (Eastwood)

Maclean, David John

Stewart, Andrew (Sherwood)

Maclennan, Robert

Stewart, Ian (N Hertf'dshire)

McNair-Wilson, P. (New F'st)

Stradling Thomas, J.

Major, John

Sumberg, David

Malone, Gerald

Taylor, John (Solihull)

Marland, Paul

Taylor, Teddy (S'end E)

Marlow, Antony

Temple-Morris, Peter

Marshall, Michael (Arundel)

Terlezki, Stefan

Mates, Michael

Thompson, Donald (Calder V)

Mather, Carol

Thompson, Patrick (N'ich N)

Maude, Hon Francis

Thorne, Neil (Ilford S)

Mawhinney, Dr Brian

Thornton, Malcolm

Maxwell-Hyslop, Robin

Thurnham, Peter

Meadowcroft, Michael

Townend, John (Bridlington)

Mellor, David

Tracey, Richard

Meyer, Sir Anthony

Twinn, Dr Ian

Mills, Sir Peter (West Devon)

Vaughan, Sir Gerard

Miscampbell, Norman

Viggers, Peter

Mitchell, David (NW Hants)

Waddington, David

Molyneaux, Rt Hon James

Wakeham, Rt Hon John

339

Waldegrave, Hon William

Winterton, Mrs Ann

Walker, Bill (T'side N)

Winterton, Nicholas

Walters, Dennis

Wood, Timothy

Wardell, Gareth (Gower)

Wrigglesworth, Ian

Warren, Kenneth

Yeo, Tim

Watson, John

Young, Sir George (Acton)

Watts, John

Younger, Rt Hon George

Wells, Bowen (Hertford)

Wells, Sir John (Maidstone)

Tellers for the Ayes:

Whitfield, John

Mr. John Wheeler and

Wiggin, Jerry

Mr. Jeremy Hanley.

Williams, Rt Hon A.

NOES

Adams, Allen (Paisley N)

Janner, Hon Greville

Anderson, Donald

Kilroy-Silk, Robert

Atkinson, N. (Tottenham)

Lewis, Sir Kenneth (Stamf'd)

Barnett, Guy

Lewis, Terence (Worsley)

Barron, Kevin

Lloyd, Tony (Stretford)

Beckett, Mrs Margaret

Loyden, Edward

Benn, Tony

McCartney, Hugh

Bennett, A. (Dent'n & Red'sh)

McDonald, Dr Oonagh

Bidwell, Sydney

McKay, Allen (Penistone)

Boothroyd, Miss Betty

McKelvey, William

Boyes, Roland

McNamara, Kevin

Bray, Dr Jeremy

McWilliam, John

Brown, Gordon (D'f'mline E)

Madden, Max

Brown, Hugh D. (Provan)

Marek, Dr John

Brown, N. (N'c'tle-u-Tyne E)

Marshall, David (Shettleston)

Buchan, Norman

Maxton, John

Callaghan, Jim (Heyw'd & M)

Maynard, Miss Joan

Campbell, Ian

Michie, William

Campbell-Savours, Dale

Mikardo, Ian

Canavan, Dennis

Mitchell, Austin (G't Grimsby)

Clark, Dr David (S Shields)

Morris, Rt Hon A. (W'shawe)

Clarke, Thomas

Oakes, Rt Hon Gordon

Clay, Robert

O'Brien, William

Clwyd, Mrs Ann

O'Neill, Martin

Cohen, Harry

Park, George

Cook, Frank (Stockton North)

Parry, Robert

Corbett, Robin

Patchett, Terry

Corbyn, Jeremy

Pike, Peter

Cowans, Harry

Randall, Stuart

Crowther, Stan

Redmond, M.

Cunliffe, Lawrence

Rees, Rt Hon M. (Leeds S)

Davies, Ronald (Caerphilly)

Richardson, Ms Jo

Dixon, Donald

Roberts, Allan (Bootle)

Dubs, Alfred

Roberts, Ernest (Hackney N)

Duffy, A. E. P.

Robertson, George

Eastham, Ken

Rooker, J. W.

Edwards, Bob (W'h'mpt'n SE)

Rowlands, Ted

Evans, John (St. Helens N)

Short, Ms Clare (Ladywood)

Ewing, Harry

Skinner, Dennis

Fisher, Mark

Smith, C.(Isl'ton S & F'bury)

Flannery, Martin

Snape, Peter

Foot, Rt Hon Michael

Soley, Clive

Foster, Derek

Stewart, Rt Hon D. (W Isles)

Foulkes, George

Strang, Gavin

George, Bruce

Thomas, Dafydd (Merioneth)

Godman, Dr Norman

Thorne, Stan (Preston)

Gould, Bryan

Torney, Tom

Grist, Ian

Wareing, Robert

Hamilton, James (M'well N)

Weetch, Ken

Hamilton, W. W. (Central Fife)

Welsh, Michael

Harman, Ms Harriet

Wilson, Gordon

Harrison, Rt Hon Walter

Winnick, David

Haynes, Frank

Heffer, Eric S.

Tellers for the Noes:

Home Robertson, John

Mr. Brian Sedgemore and

Hoyle, Douglas

Mr. Tom Pendry.

Hughes, Roy (Newport East)

Question accordingly agreed to.
Resolved,
That the matter of the complaint be referred to the Committee of Privileges.

Local Government (Prescribed Expenditure)
Mr. Speaker: We now come to the somewhat delayed debate on the local government prayer.
6.8 pm
Dr. John Cunningham: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Local Government (Prescribed Expenditure) (Amendment) Regulations 1985 (S.I., 1985, No. 257), dated 25th February 1985, a copy of which was laid before this House on 4th March, be annulled.
In a speech in Los Angeles in 1952 the American politician Adlai Stevenson said:
"Bad administration can destroy good policy, but good administration can never save bad policy."
What the Secretary of State for the Environment consistently and unerringly demonstrates, whenever he introduces his policies to the House, is his determination to have bad policy and bad administration. These regulations are no exception. This is the third occasion on which the House has had the opportunity to consider the crucial issues involved in the Government's policies for the control and reduction of local government capital expenditure which goes to investment in the built environment of Britain.
The Government's case remains deeply unconvincing. Whatever tests are applied, the policy is not only demonstrably stupid in the prevailing social and economic climate, but deeply damaging to millions of people, our infrastructure and to the future of the British economy. The arguments of the Secretary of State have few friends outside the Cabinet, almost none in local government and the building and construction industry, and are heavily criticised by professional and academic bodies involved in local government. Yet again the right hon. Gentleman has united local authority organisations against him, including those dominated by his Conservative friends.
Local authority capital expenditure has been consistently reduced in every year of the Government's term of office. In 1982–83 it was approximately half of the total a decade ago, and in real terms about £1 billion less than when the Government came to office. Ministers now argue that local authority capital expenditure must be controlled and that councils must lend their money, not spend it on projects and investments or invest it in the infrastructure. Ministers argue that that must be done so that the public sector borrowing requirement can be reduced.
In effect the Government are forcing local councils to use their money in support of the political aims and objectives of central Government. In doing so, they are preventing councils from meeting the desperate needs of the millions who are living in overcrowded and unfit housing and who need improvement grants. If today it is true that local government capital expenditure affects the PSBR, it must also have been true in 1981, when the PSBR was far higher than it is now. At that time councils were given the freedom to use 50 per cent. of their capital receipts, and were promised by the right hon. Member for Henley (Mr. Heseltine) that they would continue to be able to do so. They were also allowed to spend 100 per cent. of their receipts from other sources.
Shortly after that, during the run-up to the 1983 general election, in the now infamous quote, the Prime Minister said:

341
"We need more capital spending by local government and in the public sector generally. I agree that it is vital to maintain the nation's infrastructure, its roads, its buildings, its water supply and its drains."—[Official Report, 3 November 1982; Vol 31, c. 21.]
If that was true in 1982, it is even more true today, given the deterioration that has taken place in our environment and the even worse problems now being faced by the building and construction industry.
At the same time, the Prime Minister wrote to the leader of the Association of Metropolitan Authorities expressing her anxiety that councils were underspending their capital receipts. She urged them to spend and to invest. Two years later, with far greater unemployment and a much greater need for investment in housing, schools and our inner cities, the Government make a U-turn and take further central authoritarian control of other people's money.
It is not difficult to expose the wider failures of the Government's economic policy. At present we have crisis interest rates, appalling unemployment, social deprivation and inadequate investment, yet public expenditure is taking a bigger share of national income than it did in 1979. In pursuit of their failed and perverse economic theories the Government have damagingly reduced the quality and scope of public services, while increasing the share of national income taken by public expenditure from 39·5 per cent. in 1979 to 42·5 per cent. now. That is the exact reverse of what was promised, and a result which, perhaps more clearly than anything else, demonstrates the folly, failure and crass stupidity of their policies.
The Government now propose further to control and reduce the proportion of capital receipts that councils can spend, which at present in total appear to be between £5 billion and £6 billion. The new rules will mean that councils can spend only 20 per cent. of their receipts from house sales, 30 per cent. of receipts from land disposals and 30 per cent. of other income. So much for the promise of the right hon. Member for Henley to have "a bonfire of controls".
The effect of the latest Government-imposed control will be severe, especially in housing, which accounts for two thirds of local authority capital expenditure. It will have serious implications for education, social services, recreation, roads and transport. In addition to the control, there will be an 11 per cent. cash reduction in the housing investment programme in the coming financial year. That is at a time when people in all types of housing desperately need assistance. The advice given to the House by the Secretary of State on previous occasions not only flies in the face of any sensible macro-economic argument and ignores the massive burden of evidence from industry and commerce on these issues, but deliberately conceals the appalling consequences of these proposals for millions of people. Homelessness will increase, council house waiting lists will lengthen, the alarming deterioration in private and public housing will accelerate, and thousands more families will be condemned to live in unfit, damp, cold, miserable conditions. As the director of Age Concern told me in a letter, which other hon. Members will also undoubtedly have received:
"Councils are cancelling planned sheltered housing."
The construction of sheltered housing has been halved under the Government. Elderly people will again suffer, as will disabled people waiting for special accommodation.
The proposals bring no comfort to young people who seek a home or to those who want a grant to improve their
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properties. Many councils have effectively closed their lists to those seeking such assistance. Recent surveys have come up with startling quotes from Conservative-controlled councils. The Tory-controlled metropolitan borough of Sefton list under housing projects either lost or delayed:
"Improvement Grant applications received between April and July 1984, to be dealt with. No more applications will be dealt with except for disabled grants where action has been commenced by the Authority.
Audio alarm system to a central control network for 260 elderly persons, accommodation.
Environmental works to council housing estates.
No major funding for housing associations. Reduced expenditure on all housing activities."
The authority says that if the capital receipts are reduced, Sefton will in effect lose nearly 35 per cent. of its spending power in the coming financial year.
The story is the same for the Conservative-controlled West Lindsey district council in Lincolnshire. In 1983–84 total housing spending approached £4·5 million. That is to be reduced to less than £3 million for the current financial year, and further reduced because of restraints on capital receipts to just over £2 million in the coming financial year — effectively halving the council's expenditure on housing within two financial years.
The story is the same from Conservative-controlled South Oxfordshire and Bournemouth and, of course, from authorities under Labour control. Those results come from a survey carried out by the National Housing and Town Planning Council following the Secretary of State's announcement.
In education, the school building programme will be badly affected. As Her Majesty's inspectors reported in 1984, poor or unsuitable accommodation is already adversely affecting the performance of one quarter of all schools visited. The report states:
"All in all, the state of much of the school building stock is already a cause for concern and the situation is apparently worsening."
Government policies and these proposals have been deluged in criticism from the building and construction industry. The Building Employers Confederation forecasts the loss of about 150,000 jobs. The British Aggregate Construction Materials Industries describes the Government's policy see-saw as extremely damaging to planning and costly for all involved. The Federation of Civil Engineering Contractors said, of a speech in November by the Chief Secretary to the Treasury, who is asleep at present:
"We consider many aspects of your speech to have been highly damaging and calculated to mislead"
the industry. It recognises the prospects for the industry and for employment as being grim as a result of the Government's policies.
After six years of this Administration, Britain comes bottom of the international league for spending on infrastructure, according to the Organisation for Economic Co-operation and Development. The importance of policies to renovate, renew and improve our infrastructure has been widely recognised and emphasised by the National Economic Development Council, the CBI, the TUC and the British Institute of Management among others. The case for increased, better-planned and sustained public capital expenditure is overwhelming. Almost everyone except the Government believes that, and recognises the major contribution that could be made to job creation, improved social conditions and better

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economic performance. Our inadequate and declining infrastructure and insufficient investment in it are important reasons why private sector investment is not taking place in many cases.
The Government's policy fails on social grounds. It fails on economic and industrial policy grounds, too. In addition, the Government are hopelessly wrong in terms of good local administration and the efficient use of public money. In its sixth report the Treasury and Civil Service Select Committee concludes that the rationale for existing arrangements has everything to do with the Government's desire to reduce the PSBR and too little to do with rational use of local authority assets.
That view seems to be shared by the Audit Commission, which was created by the Government to examine such matters, and which was described, at least in its infancy, by the Secretary of State,
"as providing councillors with a powerful new weapon in their fight to keep costs down."
He soon changed his tune when the Audit Commission published its massive criticisms of his policies on local authority block grant distribution. We are told that he went along, gave the commissioners a rocket and then left in a huff. The Under-Secretary of State—the hon. Member for Bristol, West (Mr. Waldegrave)—then warned the Audit Commission publicly about its getting too much publicity for its work. He said:
"Auditors need to do much of their work by stealth."
Success at last. The commission seems to have taken him at his word, because by stealth I have obtained—I do not know the source—a copy of its latest draft report on capital expenditure controls in local government. It is a substantial document entitled, "The Case for Reform." The commission concludes that changes in Government policy are required as a matter of urgency. It observes that serious problems exist with present policies—that will come as no surprise to many people in the Chamber. They generate waste, says the Audit Commission, and inefficiency at local level and fail to give the control that the Government profess to be seeking in the interests of their policies. Government policies, says the Audit Commission in its draft report—
The Minister for Housing and Construction (Mr. Ian Gow): It is a draft.
Dr. Cunningham: Yes. I said at the beginning that it is a draft report. It states that Government policies have resulted in a decline in capital expenditure and its effective use, and will continue to do so unless changed.
The commission gives detailed arguments to support its conclusion—
The Secretary of State for the Environment (Mr. Patrick Jenkin): In response to an intervention from my hon. Friend the Minister for Housing and Construction, the hon. Gentleman acknowledged that this is a draft. He has prefaced every quote from the document by saying, "The Audit Commission says". Does he have any evidence that the draft report in his possession has been approved by the Audit Commission? I can tell him categorically that it has not. The hon. Gentleman would be wise to await the report that comes from the Audit Commission.
Dr. Cunningham: Of course I shall wait for the Audit Commission to publish its report. It is a mystery why it has
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taken the commission so long to do so, given that it has been working on it and that this is the third occasion on which such matters have been debated in the House. I regard the fact that the commission has not yet published its report with some suspicion. We have been round this course before. The Secretary of State's intervention is similar to one that he made when the previous report was discussed—
Mr. Patrick Jenkin: That was quite different.
Dr. Cunningham: The right hon. Gentleman says that it was different, but he knows that that is not true. It was at the time of the draft, and remained, a damning indictment of Government policy. It would be astonishing, given the nature of these conclusions about Government policy, if, at the 11th hour, their nature, tone and content were to change. But I accept what the right hon. Gentleman says. The House will see what the published report has to say about Government policy. My guess is that it will be little different from the conclusions set out in the draft.
From whichever angle one considers the Government's bungling and incompetence over local government, the failure of their policies is all too clear. In this matter of crucial public investment our money is being misused, mismanaged and wasted in a manner that is criminal, given the problems faced by the people of Britain. Yet, in the face of all the evidence, the Secretary of State ploughs on seeking more controls and more central powers in these regulations.
I began by quoting the American politician Adlai Stevenson. It is appropriate to conclude with another quotation from America, this time by one of the founding fathers, James Madison, who, speaking in Virginia in June 1788, said:
"I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations."
Those words accurately reflect the Government's approach to local democracy, and the regulations are yet another example of such encroachment. They should be rejected.
6.30 pm
The Secretary of State for the Environment (Mr. Patrick Jenkin): I should like to begin by setting out the background to the regulations that we are considering on the Prayer moved by the hon. Member for Copeland (Dr. Cunningham). May I say at the outset that we welcome him back to the House after his illness. We are glad to see that he is in such good form.
Since 1979, three quarters of a million families have been able to buy the council houses they live in. This, together with other sales, has generated receipts over the last few years amounting to nearly £10 billion. Year by year, many of these receipts have been spent but the spending, mainly because of a hesitant start in the early years—the hon. Gentleman might have recognised that fact when he quoted what the Prime Minister said in 1982 —has not kept pace with the inflow of receipts. There is now an accumulated unspent amount of receipts of around £5 billion or more.
This sum of £5 billion of accumulated receipts has two effects. First, until it is spent it helps to reduce the aggregate debt of local authorities. The total of local authority external debt in England is now about £30

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billion. Without the accumulated receipts, this figure would be several billions higher. Secondly, as the receipts are spent, the amount spent adds to the total of public expenditure and local government debt rises towards £35 billion.
There is nothing in the regulations—again, I need to make this clear after the hon. Gentleman's speech—to prevent these receipts in due course from being spent by the authorities to which they belong. The only issue, at least on this side of the House—a good many more of my hon. Friends are attending this debate than are hon. Members sitting behind the hon. Member for Copeland—is the pace at which those receipts should be spent.
Mr. Robin Maxwell-Hyslop: Will my right hon. Friend give way?
Mr. Jenkin: When I have developed my argument, I shall gladly give way to my hon. Friend.
It is central to the Government's case that the pace at which those receipts should be spent must be consistent with the overall judgment of the proper level of public spending that the country can afford. That in turn is determined each year by the Government. It is subject each year to the approval of the House of Commons. The total of United Kingdom public expenditure for 1985–86 at around £132 billion was approved by this House when it voted on 6 December 1984 to approve the autumn statement and again when it voted last week on the public expenditure White Paper.
Those who argue either that it does not matter how fast those receipts are spent or, alternatively, while accepting some restraint, that they should be spent faster than the Government are planning, should recognise that any additional spending above the national cash limit will add to the overall planning total of public expenditure and therefore must add to the overall total of public borrowing. I now give way to my hon. Friend.
Mr. Maxwell-Hyslop: I am most grateful to my right hon. Friend. How can my right hon. Friend allege that that is the only issue, when I took the trouble to write, and to send a copy to the Chief Whip, telling him that there was a major issue; that last year he, with the consent of the House, imposed an open-ended commitment on local authorities to buy back defective houses in certain categories and that he is now making no provision whatsoever for meeting the obligation which he imposed? How can my right hon. Friend say that what he has told the House is the only issue when he ought to know that it is not the only issue?
Mr. Jenkin: I read my hon. Friend's letter last night and those of one or two of my other hon. Friends who have written on the same subject. My hon. Friend will find that later in my speech I shall have something to say which may be of interest to him.
Mr. Tony Banks: Will the Secretary of State give way?
Mr. Jenkin: No, I am not going to give way.
I was making the point that, as the receipts are spent, inevitably this adds to public spending and to the overall total of public borrowing. There really is no way of arguing, as some have argued, that in some way, because there are receipts from the sale of public assets, the normal mechanisms for the control of total public spending should not apply to them. That is why, from the moment that this
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issue came before the House last December, the Government, in the series of debates to which the hon. Member for Copeland referred, have argued that the pace at which these accumulated receipts can be spent is central to the Government's management of the economy.
The provision made in the autumn statement and in the public expenditure White Paper for gross local authority capital spending in England next year is planned at just over £4 billion. The importance of the estimated capital receipts in that total can be gauged from the fact that just over half that figure of £4 billion will come from the receipts which will flow in to local authorities from asset sales during the year, leaving just under half as the net figure that goes into the overall planning total. Although the proportions have differed in earlier years, the principle has been the same. As the receipts have been generated, so they have been treated as negative public expenditure. Correspondingly, as they are spent they add to expenditure.
My right hon. Friend the Member for Worthing (Mr. Higgins)—both in an article in The Guardian and on other occasions—and the Select Committee of which he is the distinguished Chairman, have argued that the receipts should not be treated as negative expenditure but should be regarded instead as a method of financing public expenditure. I understand that argument, but have to say that it is not and has not been the convention on which successive public expenditure White Papers have been based under the management of successive Governments. The hon. Member for Copeland will recognise that when, in 1977, our predecessors sold some of the shares in British Petroleum for over £500 million, the receipts were treated in exactly the same way as I have described. They were treated as negative public expenditure.
It is often argued that councils should be free to spend the receipts as they arise and that it does not make any difference that they arise in one year and are spent in another. I should like to answer that point, because it is an important part of the argument. When, in the 1980 Act, we moved away from the old system of controlling borrowing project by project to the new system of controlling total capital spending, it was seen right from the outset that it would be necessary to prescribe a proportion of the receipts that could be spent in any year, leaving the balance to be carried forward to future years.
The reason for this is that each year the Government take into account the amount of receipts as they arise when fixing the national total for capital allocations, and in particular in fixing the allocations to councils with the greatest housing needs. If that were not done, many of our rundown inner cities and other poorer areas simply would not have been able to have the housing investment programme allocations of the size that they have had. Those who argue that councils with large receipts should be entitled to spend the lot must explain how, under that system, the poorer councils with fewer receipts would still receive fair allocations.
It will be within the experience of many hon. Members on both sides of the House that many of these inner city areas have been unable to generate receipts on anything like the scale of other authorities because there simply is not the same attraction to tenants of owning a flat in a rundown tower block as there is of owning a semidetached house in the suburbs or in a country town. That is a fact of life. If, therefore, councils with receipts had been free to spend all their receipts as they arose, the

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capital allocations made to authorities with relatively few receipts would correspondingly have had to be much lower.
Mr. Allen McKay: Irrespective of the right hon. Gentleman's argument—I do not believe in it—is it not a fact that my local authority had its wrist slapped for not selling council houses and that one of the things that the Secretary of State told it was that capital receipts that it generated could be used to replace stock? Now, it has stopped replacing stock. What has happened to that promise?
Mr. Jenkin: The hon. Gentleman is wrong. Nothing in the order stops the use of capital receipts. All that it does is to slow down, spread out and regulate the pace at which the capital receipts are spent. As the hon. Member for Copeland said, it is not only that the 20 per cent. may be spent—the balance is carried forward as well. The whole of the amount is eventually spent over time. I notice that the hon. Member for Barnsley, West and Penistone (Mr. McKay) did not try to argue with my proposition that, if councils had been free to spend the whole of their receipts, and if there had been no re-allocation of those receipts this year, those authorities, many of them deprived city authorities with housing problems, could not have had the allocations that they now have.
Mr. John Fraser: If that is true—I do not believe it to be true—why has the Secretary of State cut the housing investment programme for the inner city borough of Lambeth from around £100 million in real terms in 1979 to £34 million next year?
Mr. Jenkin: It comes ill from the hon. Gentleman to complain about cuts in local authority housing capital when, under the Government of which he was a member, it was cut in five years by 45 per cent. He should recognise that.
My hon. Friends are entitled to say, with some justice, that the system set up by the 1980 Act has not worked as it should have. For the Government, it has not delivered the cash limit, and for councils, it has not delivered the benefits that were intended in getting rid of the old system of project-by-project borrowing control. That is why we are now in discussion with the local authority associations to work out a better system that will deliver both the national cash limit and a framework in which local authorities are more free to plan their capital spending with greater certainty.
Over and over again, local authorities ask for greater certainty. They often ask that they should be able to plan their capital spending over a longer period. I understand that and it is a justifiable request. I can answer that over recent years we have gone a long way to meet this demand. For instance, both last year and again this year, when announcing the allocation for the year immediately ahead—what I might call year one—we have at the same time given firm assurances that local authorities can rely on receiving allocations of a certain amount for both year two and year three. In the figures for the allocation for this coming year—1985–86—we have delivered fully on that undertaking.
Furthermore, local authorities have a 10 per cent. Year-end tolerance that allows them to carry forward unused
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allocations. The position in Wales is a little different from that, and my right hon. Friend the Secretary of State for Wales, who hopes to catch your eye, Mr. Deputy Speaker, later in the debate, will deal with that point.
Mr. Chris Smith: Why was the commitment to carry forward 80 per cent. into succeeding years not available to the Greater London council for the stock transferred from the GLC to the boroughs?
Mr. Jenkin: Perhaps the hon. Gentleman realises that that is a highly technical point. It is inappropriate to deal with it now, but if he likes, I would be happy to write to him with the explanation. For the great generality of councils, that undertaking was given for two successive years and it has been delivered.
In the debate on 27 February, my hon. Friend the Minister for Housing and Construction announced an important concession for certain low-cost home ownership schemes in England. For schemes for building under licence, building for sale and purchase for resale we had originally proposed to reduce the prescribed proportion from 100 per cent. to 30 per cent. We listened to what the local authority associations said about this, to the representations of the individual councils and to the point made by several of my hon. Friends that such a move would put at peril the future of these valuable schemes. We have decided that councils should continue to be able to use 100 per cent. of such receipts in the year of sale to match their expenditure on this project. From experience, it is estimated that this should allow over 6,000 families to benefit from these schemes next year.
We are making another small change. The new Historic Buildings Commission makes grants available to councils for the preservation of buildings in their ownership. Such sums will now score as capital receipts, 100 per cent. of which may be spent by councils on preserving our national heritage.
Mr. Teddy Taylor: We appreciate all this, but is my right hon. Friend aware of the special problems faced by Southend and some other borough councils in making provision within their budget for legal obligations for the repurchase of Unity and other houses? As it is almost impossible for such councils to make a proper estimate of the cash involved, could the Secretary of State at least say that he will consider making some additional resources available for this special problem?
Mr. Jenkin: I have a great deal of sympathy with my hon. Friend's point, which is somewhat similar to the point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). Perhaps I can answer the point in this way. In making the HIP allocations for 1985–86, we took account of the need for expenditure under the Housing Defects Act. I recognise, as my hon. Friend the Member for Tiverton has pointed out, that some authorities have particular difficulties in meeting their obligations under this Act in addition to their other commitments. Therefore, I am prepared to consider sympathetically requests from authorities that cannot otherwise meet their obligations under the Housing Defects Act for additional allocations towards the cost of repurchasing or reinstatement grants. I hope that my hon. Friends will regard that as helpful.
Mr. Roger Gale: My right hon. Friend referred to the concessions that my hon. Friend the

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Minister for Housing and Construction made last week. Will he confirm that this also refers to sheltered housing, and in particular to joint venture schemes?
Mr. Jenkin: This certainly applies to sheltered housing if it falls within the category that I have described, but the normal sale of land for sheltered housing purposes, which was not a build for sale or a low-cost ownership, would be caught by the ordinary rule. If my hon. Friend has any particular case in mind, I should be happy to look at it as a matter of urgency, because I understand that he wishes to know how things stand.
We have already given an undertaking, in relation to my statement last July calling for restraint, that authorities that have complied with the request to restrain their expenditure this year will receive additional allocations of 5 per cent., and that will be honoured. That promise remains and we have allowed for it in our plans. It is too soon to say how much will be needed to meet that commitment, but there is a modest margin of flexibility within our plans to meet the points raised by my hon. Friend the Member for Southend, East (Mr. Taylor).
Mr. Roger Sims: Can my right hon. Friend explain the economic logic of allowing certain authorities an additional 5 per cent. capital allocation—in other words, allowing them to borrow more money for capital purposes—and not allowing them to spend the money that they already have?
Mr. Jenkin: With respect, my hon. Friend draws a distinction that is not as real as he is seeking to make it out to be, because capital receipts represent in this context an authority to spend. If the council has capital receipts and is given the extra 5 per cent., it has the authority to spend and may draw it from those capital receipts. With respect, I think that 5 per cent. is welcomed by the authorities who have complied and continue to comply with the request that I made, and I can tell my hon. Friend the Member for Chislehurst (Mr. Sims) that that will be honoured.
Local authorites which have generated capital receipts by the sale of land and council houses, or by refinancing their mortgages, or by the sale of other capital assets, retain the ownership of these receipts. They can use the cash to pay off debt and so reduce their interest charges; they can put the money on deposit and so generate interest receipts; they can use the money for internal lending to other services in the same authority; or they can lend the money to other institutions. Whichever they do, the cash stays theirs. The control is over the rate at which the receipts may he spent. That control is necessary to ensure that the aggregate of local authority capital spending year by year is in line with the national provision for capital spending made by the Government and approved by the House.
Mr. Robert Banks: I am sure that my right hon. Friend will recognise the important financial contribution that local authorities make to housing associations. For instance, Harrogate borough council in this financial year has contributed £400,000 by way of loans and grants. Under this measure, in the next financial year no new loans will be available. Will my right hon. Friend consider being flexible and allowing money diverted and used in this way not to be calculated within the 20 per cent.?
Mr. Jenkin: I take note of what my hon. Friend says. I should point out that much the most important financing of housing associations is by the Housing Corporation. The figure which we have allocated for the Housing Corporation for next year is virtually the same as the figure for this year—£685 million. How far local authorities decide what proportion of their resources should go to lending to housing associations must be for them in the light of the competing priorities they face.
The hon. Member for Copeland towards the end of his speech referred to the construction industry. My answer is that the volume of local authority capital work for the construction industry will be precisely in line with the provision made in the public expenditure White Paper. These regulations are intended simply to make sure that that limit is not substantially exceeded.
Of course I understand the anxieties of the construction industry but, as I told the group of eight when I met it, and as I say to the House now, it is not right to look at public sector capital investment on its own. I must ask the hon. Gentleman to look at the total of public and private investment. Total construction output rose 4 per cent. in volume in 1983 and rose again substantially in volume in 1984. Private sector industrial and commercial orders are up over 25 per cent. year on year. Private industrial orders in the last quarter of 1984 were no less than 67 per cent. up on the corresponding quarter in 1983.
If one looks still more widely at the total level of investment in the country, one sees that this country had the highest ever total of fixed investment last year —some £55 billion, a 7·5 per cent. increase in real terms on the previous year. All the forecasts point to a further advance in total capital investment next year, and A is of the highest importance for jobs that we maintain that progress.
Dr. Cunningham: I am grateful for the kind remarks of the right hon. Gentleman about my recovery.
Why does the Secretary of State think that the building and construction industry is so concerned? It is because, last year, bankruptcies and closures were at an all-time record level, and the building and construction sector was the worst affected. Whatever he says about total fixed capital investment—which includes what the Ministry of Defence is spending on hardware and so on—it is a meaningless figure in this context. The reality is that local authorities want to spend their own money on environmental investment. They do not want to be forced by the Government to be lenders, which is what the right hon. Gentleman is making them be; they want to provide new houses and new schools and to improve the infrastructure, and the private sector of the building and construction and civil engineering industries wants them to do that also.
Mr. Jenkin: I am astonished that the hon. Gentleman should regard the figure for total capital investment—investment in the future prosperity of the country—as meaningless. If he wants public investment to be higher, I have to tell him that higher public spending would have to be matched by higher taxation or higher borrowing or both. I want to see more investment and more jobs created, but unlike the hon. Gentleman I do not see the stimulus coming mainly from public spending. I want to see it coming from a sustained and balanced economic recovery.
We are working out with the local authority associations a better system of control. We want to get that

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into effect as swiftly as possible. That may require legislation, but we should like to move as far as possible towards whatever new system emerges in 1986–87.
In the meantime, we have to operate on the present system under the present Act to protect the national cash limit for local authority capital spending. I believe that the difference between us is one not of principle but of timing. I accept that there are many worthwhile projects to be done and many needs to be met, but we cannot afford them all at once. If we try, the result will be a further massive public overspend at a time when total investment is at an all-time high.
For these reasons, I ask the House to reject the prayer and to stand by the public expenditure plans set out in the autumn statement and agreed by the House last December.
6.56 pm
Mr. Chris Smith:: We have heard from the Secretary of State a supposed case for the action which he is taking under the regulations which totally fails to explain or justify the economic argument which lies behind the Government's thinking and decision. The only point which the Government appear to be making is that, when they wrote the public expenditure White Paper, they plucked a figure out of the air for total public sector spending on construction and capital work, and they are now intent on sticking to that figure. It is in order to stick to that figure that they have placed the regulations before the House.
We are therefore entitled to ask the Government why the figure has such magic properties and qualities. Why is it somehow economically essential to stick to the target for capital spending enshrined in the public expenditure White Paper? The Government have totally failed to answer that question and have told us only that it is essential to do so. I hope that when the Government sum up later they will begin to address that economic question.
In considering the Government's overall economic philosophy, I understand that they are concerned about the level of the public sector borrowing requirement, yet the measure now before the House will have at most a marginal effect on the public sector borrowing requirement. The only reference by the Secretary of State to that question was that the measure would help to reduce the aggregate of local authority debts until the moneys are spent. That has a marginal effect on interest rates and expenditure on the debt. In the context of overall local authority expenditure and capital expenditure, the effect of the public sector borrowing requirement is surely marginal.
It cannot be because of their attachment to the level of the PSBR that the Government are imposing these regulations on the House tonight. Why, then, are they doing it? What economic case do they have for sticking to this target for capital expenditure? Is it not simply that the Treasury has established a figure, in pursuance of an economic idea that is sheer madness, for the level of public expenditure as a whole, including money being spent by local authorities, which is local authority money, which does not belong to, or have any impact on, the Exchequer in relation to the level of taxation, or, in other than a marginal sense, have any effect on the PSBR?
The Treasury is seeking to make that figure stick, and we are entitled to know why. If it is anything other than
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an abstruse and absurd economic nostrum that leads the Treasury to determine that figure, that has not been made clear either today or in the debates that we have had on this issue in recent months. It is time for Environment Ministers to stand up to the Treasury and say, "Local authorities have needs, particularly in respect of the homeless and badly housed, which we must respect. We shall not accept, simply because we are told to accept it, the economic nostrum which the Treasury is seeking to impose."
Mr. Gerald Bermingham: Does my hon. Friend agree that if one puts a pound note in a bank, in a year's time it is still only a pound note? It will not have rotted. On the other hand, if one fails to carry out essential housing repairs to pre-1919 property, the rot continues and within a year the cost of repairs is more than the interest on the money that the repairs would have cost a year earlier.
Mr. Smith: My hon. Friend makes an important point. At the current rate of deterioration of the housing stock it will take, it is estimated, 900 years to replace it, and the more the housing stock is allowed to deteriorate—the more faults that go unrepaired and the more dampness creeps in and so on—the more expensive it will be when finally we get round to dealing with the matter.
The Secretary of State made great play with the question of timing, saying that while local authorities could not do the work this year, they would be able to do it next year or the year after and that the money would still be there. That was the kernel of his argument, but let us consider the impact of the policy which the Government are imposing, for which, as I say, they have advanced no real economic reasoning.
My borough of Islington is a hard-hit inner city area with great housing needs. In the coming financial year, as a result of the decisions which the Government are now imposing, my council, across the spread of capital spending, will not be able to carry out about £3·5 million worth of work, and, specifically in housing, will not be able to do about £2 million worth of work which it would have done without the regulations which the Government are imposing. That comes on top of a crisis which already exists in housing in Islington. The housing investment programme allocation has been cut drastically and is now down to £29 million. That is a pitiful sum in relation to the need that exists.
If the Secretary of State is so proud of the Conservative record in housing in the last five years, why has the housing investment programme allocation for Islington been cut in real terms by 56 per cent. since the Conservatives' first full year in office, 1980–81? Although it has gone down by 56 per cent., there is not 56 per cent. less housing need in my borough. Nor has there been a 56 per cent. increase in the housing standards of those already housed by the council. That patently cannot be the case. I see the position every day as I walk through the estates and streets of my constituency.
Having exacerbated the situation to that extent, the Government, on top of that, are taking more money away from the local authority. I see one of my constituents, the hon. Member for Harlow (Mr. Hayes) wishing to intervene.
Mr. Jerry Hayes: The hon. Gentleman may recall that I recently made a speech in support of

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rate capping and that I made a vitriolic attack on his constituency of Islington, and particularly on the local council. The present policy places a further burden on the ratepayer in that, as he will be aware, councils can drive a coach and horses through the policy by introducing a system of pre-funding, by which they can have some of their capital investment in housing, but they must pay high brokerage fees. In the long run, the ratepayers have to pay those fees.
Mr. Smith: I suppose it depends on the ability of borough treasurers to indulge in creative accounting, shifting money from one year to another and generating other sources of income to enable money to be spent on worthwhile projects.
Everything that the Conservatives have done, including the wretched process of rate capping, on which they are engaged in my constituency, has meant that local authorities, to maintain essential programmes, have had to indulge in the sort of financial manoeuvrings to which the hon. Gentleman referred. If the Government had a sensible policy towards local government finance, they would not have forced that type of posture on to local authorities.
How ironic it is that in the midst of all this need—considering the money that the Government have removed from hard-pressed inner city areas such as Islington, all for the sake of maintaining a figure plucked out of the air by the Treasury in the White Paper on public expenditure—there appeared three weeks ago in the national press reports saying that the Government were preparing to underwrite to the tune of £20 million the future of three major stately homes.
I am not arguing that it is wrong for the Government to come to the rescue of Weston Park, Kedleston Hall and Lord St. Oswald's collection of Chippendale furniture. I am not saying that it is wrong for the Government to devote £20 million of public money to those eminently worthwhile causes, and I hope that in future years the public will be grateful for what is being done.
How ironic, though, that in the midst of anguished discussions about the lack of funds for local authorities to spend on the homeless and the badly housed—on people living with damp running down the walls and water coming through the roofs on estates that are badly lit, badly maintained and are a horror to live in — the Government can find money to support stately homes and a collection of Chippendale furniture. Yet they have the cheek to tell hon. Members that they will not tell the Treasury, not that it must find the money out of its own pocket, but that it must not forbid local authorities from spending money which they already have in the bank.
When Councillor Calnan, chairman of the borough's housing committee, complained about the level of the borough's housing investment programme allocation, the Minister for Housing and Construction replied, in a letter of 4 March, that he had taken
"full account of the particular needs of the Borough both in relation to the general level of deprivation and the condition of the Council's own housing stock, when deciding on a HIP allocation of £29·319 m".
Of course, he did not take full account of the level of deprivation or the condition of the houses. All he took account of was the figure in the Treasury public expenditure White Paper. He did not come down to Islington, as he has said he will, to see the housing need
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and the desperate circumstances which tenants right across the constituency have to face every day of their lives. He took account only of what the Treasury wanted.
The Secretary of State talked about urgency. He said that the money was not being taken away from local authorities and that they were not being stopped completely from spending it; that they were only being prevented from spending it in the coming financial year. What he has ignored is that the money should be spent now. It will not do the same good in two or three years' time.
I should like to take the Secretary of State or the Minister for Housing to visit a family whom I saw a couple of weeks ago on the Barnesbury estate. That family, with three children are living in one bedroom. They cannot use the other bedroom in their flat because it is streaming with water. The children are in bad health. The family cannot move out of the flat because there is no suitable home with a garden to which they can move. The block of flats badly needs proper heating. It was built in the 1950s and does not have central heating. It needs insulation and double glazing. Something needs to be done about dampness in the whole block.
Those flats need to be made decent enough to live in. The people cannot enjoy a decent life because of the sort of place to which they have been consigned. I should like to take the Secretary of State and the Minister to see the circumstances in which that family are living. I should like the Secretary of State to tell them that the work cannot be done this year because the council will not be allowed to spend the money this year, but that it will be done in three, four or five years' time. That is precisely the impact of what the Secretary of State told the House today.
Mrs. Edwina Currie: The hon. Gentleman knows that I am sympathetic to the things that he is saying, but, in those circumstances, would it not be wise for the council to drop its considerable support for such esoteric activities as a women's committee, a peace committee and all the other ideas that it has and spend the money on improving bad housing?
Mr. Smith: I fear that the hon. Lady has perhaps been imbibing too many myths from her right hon. Friends on the Front Bench, which they seem to propagate with remarkable alacrity about my borough. We indeed have a women's committee, which does valuable work. So far as I am aware, and I am rather closer to the ground than is the hon. Lady, we do not have a peace committee. In some ways, I wish we did. It is an absurdity to suggest that because the women's committee gives very small grants to some worthwhile organisations, many of them in the ethnic minority community, it is somehow depriving families on the Barnesbury estate of the right to have repairs carried out that are desperately needed. To suggest that is nonsense, and the hon. Lady knows it.
I should like to take the Secretary of State by the hand to Bentham Court estate, which is part of the estate action programme, and show him the work which is being done to put in lifts and improve the quality of the environment dramatically. The work includes the installation of entry phones, knocking down walls to make rooms bigger and the installation of central heating to make good flats out of very old estate property. Much good work has been done already in other estates, and work has just been started at Bentham Court. The Minister should see that

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work and then then decide whether it should be stopped in mid-stream. Only one part of the estate has been renovated. The rest will have to wait a few more years until the amount of capital receipts catches up or the Treasury allows the Department of the Environment to give a greater allocation to local authorities. I should like the Secretary of State to tell the tenants on that estate why they must wait for work which needs to be carried out urgently.
I should also like the right hon. Gentleman to see the asbestos on the Bemerton estate. That asbestos cannot be taken out because the local authority will not have enough money to do the work. The Secretary of State should tell us whether he took that problem into account when he was making the housing investment programme allocation.
Then there are the former GLC estates. The GLC has hitherto made money available for the work which needs to be carried out on those transferred estates. The Secretary of State should meet some of the thousands of people who report every year to the local authority as homeless and in need of accommodation. The local authority has been striving valiantly to avoid the use of appalling bed-and-breakfast accommodation as the only alternative to providing a roof over people's heads, simply because there is not enough housing stock available to let.
The scale of the need in my constituency is appalling. All that the Government can offer is a further cut instead of hope and some crumbs of comfort that they might be able to make more money available for next year. They give no sign that they will recognise the size of the problem or the difficulties which far too many tenants have to face. People have to wait for years for their first chance of renting a decent local authority home at a price they can afford. The way in which the Government are treating people like that is nothing short of shoddy and appalling. All that they are offering is a further cut, in the name of a Treasury figure plucked out of the air for the public expenditure White Paper, with no economic justification behind it. All that they are offering is a nonsensical, unexplained and unjustified economic theory which will make the housing need in my constituency more desperate and more acute.
7.18 pm
Mr. Michael Latham: It gives me no pleasure to take part in the debate. As one who has been involved in the construction industry directly since 1967 and as a director of a private housebuilding firm since 1975, I have consistently supported Conservative environment and construction Ministers in their policy regarding sales of council houses and reforms in planning procedures and in the structure of local government. But we seem to have got into a serious muddle over the use of capital receipts. It is perhaps worth recalling briefly how the muddle has arisen.
It took local authorities some time to adapt to the new rules for capital receipts. When the money for council house sales began to flood in during 1981 and 1982, councils tended to put it in the piggy bank as savings rather than use it for capital spending. They built up large reserves of unspent receipts for the years 1980–81 and 1981–82. Indeed, in 1982 both the previous Chancellor of
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the Exchequer and the Prime Minister were urging local authorities to spend up to the maximum of their permitted capital resources.
Only in the last couple of years have the local authorities begun to do so, and it was not until July of last year that a formal block was placed upon their using the unspent, accumulated backlog of capital receipts. After two years of underspending, they began to catch up by the end of 1982–83, and, by 1983–84, they began to use so much of the underspent money that they were accused by the Treasury of overspending by £368 million. In the new financial year, the overspending problem was considered so grave that my right hon. Friend announced his "voluntary" standstill last July; he narrowly avoided a full-scale moratorium last September; and now we have these latest measures.
How can such highly restrictive annual bookkeeping make any sense? The money has been raised through the sale of assets. Capital receipts are already carrying the housing capital programme. Indeed, 57 per cent. of planned housing expenditure will be financed in that way, according to the autumn statement. The 60 per cent. of the housing receipts that the Government claw back under the existing HIP system has enabled the Government to allow an erosion of the value of central Government net spending to less than one half of its 1979–80 level in cash terms, and 60 per cent. in real terms. There has been a significant central Government cash reduction.
The prescribed proportion arrangements also appear very confusing. Ministers originally introduced the claw-back of 50 per cent. of receipts under pressure from those who argued that a local authority that sold a lot of houses did not necessarily need to spend all its receipts, so some could be redistributed to others in greater need. The earlier reduction from 50 per cent to 40 per cent. was made for exactly the opposite reason—that those selling houses were not reinvesting the money in capital work, and, if they were allowed to keep only 40 per cent., that would give more money to those prepared to spend it to the full. Now we are to have a 20 per cent. permitted retention level to prevent overspending by local authorities. How can any local authority make sensible long-term plans on that basis? It is not fair of Ministers to put councils in that position. The Government are like a driver with poor clutch control who makes the car lurch forward uncontrollably, stall, and then lurch forward again. The engine will seize up that way.
My more immediate concern is for the state of the construction industry. The House should not be misled by the overall figures for new orders received by contractors in 1984, which show a 4 per cent. increase over 1983. That figure conceals a 38 per cent. increase — which I entirely welcome—in industrial new orders and a 19 per cent. rise in commercial orders, but falls of 14 per cent. in public housing, 8 per cent. in private housing and 5 per cent. in public works. Housing appears to have slipped back a little further this year. The National House Building Council registration statistics, which foreshadow the Department of the Environment's private housing starts by about a month, show a 6 per cent. decline in January 1985 compared with January 1984. Various figures have been bandied around by the industry and the professional institutions about the likely financial effect of the proposed new arrangements on public construction spending. As the

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hon. Member for Copeland (Dr. Cunningham) said earlier, the Building Employers Confederation predicts a fall of £1·3 billion and the Institute of Housing £1·2 billion.
Whatever the ultimate outturn, it is clearly bad news for construction, which has previously been grateful to Ministers for fighting off a moratorium last September. If, as Ministers have promised — and as my right hon. Friend said again today—local authorities really are able to phase their work over the next year or so, things might not be too bad in the end. However, I am afraid that it may not be as simple as that. What worries me is that the annual Treasury accounting procedure will simply throw up another potential overspend next June, and then we shall have a full-scale moratorium. Let Ministers be in no doubt that a moratorium will kill off many medium-sized contracting companies which are effectively buying work now by tendering at suicidal prices simply to keep their businesses going.
Large civil engineering contractors are undertaking road contracts far lower in value than they have ever looked at before, thus squeezing out the medium-sized firms that rely on that work to survive. Local medium-sized building firms have also been hard pressed by the reduction in public sector house building and in new school building contracts, as numbers on the rolls have fallen sharply, and by competition from cowboys and moonlighters in the domestic improvement market since the imposition of 15 per cent. VAT. Those local firms are the backbone of the industry. Their principals have tended to be the backbone of Conservative support in the constituencies. In my work I meet many builders, not just leaders of the industry. They are deeply dismayed by the latest turn of the screw. My right hon. Friend should be under no illusion about the depth of their dissatisfaction.
One does not have to be an unreconstructed neo-Keynesian wet to favour more capital projects. We need them for their own sake, not just to reduce unemployment—although God knows, unemployment is the worst social scourge facing this country and one that the forthcoming Budget must tackle energetically and with effective compassion. No Conservative Member is advocating a mad inflationary splurge. All that some of us say is that our basic infrastructure as a nation needs steady renewal now. Hundreds of thousands of houses, including many defective council houses, need major overhaul or total reconstruction, although some of them are only a few years old. Those problems cannot be left simply to the private sector, especially as it has proved virtually impossible to prepare any schemes for private sector funding of public sector projects to which the Treasury is prepared to give its agreement.
Many of those sitting behind my right hon. Friend want to be able to support him in his difficult task of reconciling his sponsorship of the contruction industry and his overwhelming moral duty to help the badly housed with his equal duty as a Cabinet Minister to control public spending. No Conservative Member expects local authorities or the construction industry to avoid tight restraint on their spending in a difficult financial position. But we insist that administrative procedures should be clear and comprehensible and that obvious muddles are avoided.
The present policy on capital receipts bears all the marks of making up the rules as the game proceeds. It is clearly inadequate, Ministers know that it is inadequate, and I am glad that it is to be reviewed. However, the work
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load problem is immediate. It is no way to treat the badly housed, the local authorities or the construction industry. Therefore, I regret that I shall not be able to support my right hon. Friend tonight.
7.27 pm
Mrs. Ann Clwyd: I have the dubious distinction of representing the constituency with the highest male unemployment rate in Wales, and also the constituency with the worst housing in Wales, if not in the whole of Great Britain. I was pleased to hear the Secretary of State say that he would take account of some authorities with particular difficulties and that he would make additional facilities available to them. I hope that the Secretary of State for Wales was listening because, so far, there has not been much evidence that he shares his right hon. Friend's view.
Nearly half the houses in my constituency are unfit for people to live in. Startling new figures that have just been published show that privately owned housing in the Cynon valley is probably the worst in Wales, if not in the whole of the United Kingdom. In some areas one in three houses lack basic facilities such as sinks, wash basins, inside toilets and baths. Nearly 9,000 privately owned houses are regarded as unfit for human habitation out of the total of 20,000 in the Cynon valley. A total of 4,000 houses lack those facilities and they also lack hot water supplies.
This is a major new survey, one of the most extensive to be carried out in the United Kingdom, of all the private houses in the Cynon valley over two years. It concluded that 8,923 houses were classified as unfit. That represents a staggering 48 per cent. of the private housing stock.
The report produced by the Cynon valley housing specialist has brought calls for urgent aid for the area—calls that we have communicated to the Secretary of State for Wales and his Ministers. The report says:
"Housing conditions in the Cynon valley are not typical of those for Wales or for mid-Glamorgan, and whichever indicator is used the housing stock in the valley is significantly worse than any other county and probably any other district council in Wales or in the United Kingdom."
During the survey, council officials visited 18,500 of the valley's private houses—92·5 per cent. It was probably the most exhaustive survey of its kind to be carried out in the United Kingdom, and the Welsh Office has given the council considerable credit for carrying it out. It was found that 3,595 houses in the valley did not have an inside toilet—one house in five. The problem is even worse in the areas of especially high unemployment, where it is likely that at least one of the pits will shut down. That is one reason why only one out of 6,000 miners in the constituency worked during the miners' strike.
In the villages of Penrhiwceibr and Mountain Ash East, one house in three lacks basic amenities. A surprising 3,631 houses—one in five—lack a wash basin. The report also shows that 3,700 houses in the borough have no hot water supply, and that 3,000 have no bath. The report concludes:
"With the current level of investment it would take over 50 years to repair the private sector stock".
The main conclusions are that 8,923 houses in the valley are unfit for habitation, that nearly 5,000 more are fit for habitation but classed as being out of repair, that 4,496 houses lack basic amenities and that 50 per cent. of houses will cost more than £4,500 to repair, compared with a figure of 14 per cent. for the whole of Wales.

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Before the Secretary of State for Wales tells me that he would expect people in those areas to contribute towards the cost of improving their houses, I remind him that in this area the average income is among the lowest in Wales.
We took a deputation to see one of the Welsh Office Ministers. After he had listened to our case, he said that he understood the need for renovation grants as a primary instrument for tackling the problem. He suggested one or two ideas for dealing with our massive problem of deprivation, but his suggestions were merely cosmetic, and only scratched the surface of the problem. For example, the Minister suggests that we should take up the enveloping schemes. In the case of the Cynon valley, that would be merely a cosmetic approach to a serious problem.
The council has dealt with many of the comments that the Minister made when we visited him. The Minister suggested that there was a lack of council initiative in housing. He wanted to know why the council had failed to take advantage of Government money on offer between 1982 and 1984, espcially in the form of repair grants. The answer is that, in 1982, when the Government announced a more ready availability of repair grant money, the council was ill-equipped to cope with the large number of applications made, because—perhaps foolishly—the council has been too ready to obey early Government instructions to limit the numbers of staff:
"We just did not have the numbers available to deal with the increased numbers of applications … We did gear ourselves to this new position only to find the almost overnight withdrawal of the facility so that the full benefits of our changes of policy could not be achieved."
The borough council should not be blamed for a stop-go policy. Perhaps the borough council should have been bloody-minded instead of acquiescent.
The enveloping schemes are being discussed at borough council level at the moment, but the council feels that that is a cosmetic approach rather than a basic solution to a housing problem of such major proportions.
The Welsh Office asked us why no housing action areas have been declared on the borough. The adoption of housing action areas would be merely playing with the problem. The whole of the Cynon valley should be a housing action area — not just a couple of hundred houses.
We were asked why the council had not taken advantage of improvement for sale arrangements. That concept, too, is not really relevant to an area with such massive problems. The Cynon valley is a depressed area, with the highest male unemployment rate in Wales and very low incomes per head.
The Welsh Office also asked why the council have paid no regard to Welsh Office initiatives in housing. Those initiatives seem sound in theory, but they do not work in practice. They represent an attempt to apply comparatively minor answers to a major problem.
The housing conditions survey sets out concrete and comprehensive evidence of a serious and potentially disastrous situation which can only be dealt with by a major infusion of Government finance in the shape of a long-term and consistent policy that is not liable to be altered at the whim of one Government Department. The problem is so massive that it is believed that repairs, even at present levels, would take more than 50 years to remedy
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the problem. The total cost would probably be not less than £110 million, with more than 50 per cent. of the properties costing more than £4,500 each to repair.
This survey is probably the first of its kind in the United Kingdom. It follows recognised Government criteria. If the problem is not recognised, properties that are now reasonable could, in about 10 years, fall into the unfit category, while properties that are currently unfit may be ready for demolition. In the Cynon valley, and indeed most of south Wales, 57·1 per cent. of private dwellings were built before 1919. Surely it will be cheaper to renew them now than to build new properties in the future.
Finally, I remind the Secretary of State for Wales of what the only major survey carried out on poverty in Wales said about housing in the Principality:
"There is a major problem of renewing unfit and unsatisfactory housing which demands an acceleration in clearance, rehabilitation and new building. There is the problem also of the special needs of vulnerable groups."
There are higher percentages of disabled people living in the valleys of south Wales than in many other regions. Their needs are simply not being met. Almost every week, I meet at my surgery disabled people who are finding it impossible to continue to live in their houses. Many of them are prisoners in their own houses. They cannot get out because of the steepness of the terrain. The special needs of disabled people in the valleys of south Wales should surely be recognised.
The poverty report concluded:
"What is abundantly clear, however, is that the overall quality of the housing stock in Wales is inferior to that in almost all other parts of Britain and that the Government has no commitment to rectifying this important source of deprivation."
7.40 pm
Mr. Michael Stern: Bearing in mind the size of the economic factors involved, it is not surprising that we are debating the regulations as local authority spending accounts for about one quarter of total public spending. Any attempt to control public spending would therefore be meaningless without control of local authority spending, whether on capital or current account.
It is estimated that there will be an overspend of about £1 billion in 1984–85 in England alone. The unspent capital receipts, which local authorities would be free to spend at any time if the regulations were not approved, amount to about £5 billion. That is one side of the problem.
Conservative Members have noted the need for some form of control, but it is as if the views of Conservative and Labour Members were positively charged nuclear particles, which occasionally come together but immediately rush away from each other. The hon. Member for Copeland (Dr. Cunningham) and his colleagues have enunciated a concept—which we have heard before but which is no less ridiculous however many times it is proposed—that the money belongs to local authorities.
I have spent most of my political life, with a little success, convincing people that Governments do not have any money of their own.
Mr. Anthony Beaumont-Dark: They have plenty of mine.
Mr. Stern: They have only taxpayers' money. The money is held in trust. I do not know where the concept of local authorities' own money came from. The money came from ratepayers. I accept that surpluses have been

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made, but they result from the investment of ratepayers' money. Moreover, we are not talking about money being lost to local authorities, as it is to remain under their control. The Government are merely trying to determine the rate at which that money is spent. That has national economic consequences. It is regrettable that Opposition Members and many local authorities think that capital receipts belong to local authorities as of right. We should consider that ratepayers might like to benefit a little from capital receipts.
Mr. Simon Hughes: Can the hon. Gentleman give just one example of a local authority, representing and elected by ratepayers, which favours the regulations?
Mr. Stern: The answer to the hon. Gentleman's question is that the myth that I have just been attempting to displace has unfortunately taken hold in many local authorities. That is true of the local authorities that I have studied, all of which are Socialist-controlled. I have not studied others.
Mr. Simon Hughes: There is not one.
Mr. Stern: The authorities that I have studied hold firmly to the myth that the money is theirs.
All hon. Members have received representations on this matter. The Building Employers Confederation has asked me to vote against the regulations. It is regrettable that many of its press releases do not meet the perceptive standards of its members. It has told me that capital receipts
"should properly have been used to increase investment."
How has the confederation's desire been raised to the status of moral obligation? I agree that if capital receipts were used to increase investment, that would be convenient for members of the Building Employers Confederation, but it would be inconvenient for ratepayers and for builders who are active in the private sector.
Mr. Bermingham: Does the hon. Gentleman agree that local authorities have a statutory duty to house the homeless and to keep their housing stock in good repair? If local authorities are not allowed to use this money, they will not be able to meet the standards that we expect in a civilised society. Surely they have a duty to all ratepayers and their tenants.
Mr. Stern: I shall demonstrate later that local authorities can meet their statutory duty in housing within the proposed controls. I do not agree that local authorities can choose which groups they have duties towards, merely to fit the Opposition's argument. They have duties to many people. I accept that they have a duty to provide a reasonable housing service, although it has been overblown in the past. However, that duty must be matched by their duty to ratepayers.
The Building Employers Confederation says that the regulations will contribute to a significant fall in the industry's work load. Has it never heard of private sector capital spending? Is it unaware that the more money that is spent in the public sector, the less is available for the private sector?
Mr. Bill Michie: Ring it up.
Mr. Stern: I have.
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Does the confederation assume that its sole employers are local authorities? I note with amusement that the confederation's circular is addressed to selected Members of Parliament. It cannot even get its selection system right.
The same hysterical language is used by the housing authority part of which I have the honour to represent. The chairman of the housing authority says that the regulations will permit only half of the programme that is needed. The local council—which, of course, is Labour-controlled—has asked all Bristol Members of Parliament to represent the interests of council tenants, home improvement grant applicants and the local building industry. I accept that these are valid and important interests, but again one is omitted. My local authority does not ask me to represent the interests of the ratepayers, the majority of whom elected that authority.
Mrs. Currie: As a serving Conservative councillor, I should point out that the three groups that my hon. Friend has just mentioned are all ratepayers, particularly the industrialists. All the groups he has mentioned, including private owner-occupiers, have benefited specifically from improvement grants on which this money has hitherto been spent.
Mr. Stern: I accept that the majority of the first two groups, and perhaps a significant number in the third group, are ratepayers. However, Bristol city council is not asking me to represent their interests in totality. It is asking me to represent one of their interests, and I was trying to point out that I am also obliged to look at the other interests.
Bristol city council's needs, as expressed in its application under the housing improvement programme, include £2·7 million for new build. The city had the option of increasing joint venture schemes at little or no cost, but it has decided to go for the more expensive option. Here, again, the ratepayers do not seem to have been considered.
It is worth noting that in Bristol home improvement grant moneys receivable in the years 1982 to 1986 are estimated to be £23·6 million. In the period 1975 to 1979, under a Labour Government, the equivalent receipts were £2·2 million. The city has a large build-up of unspent capital receipts, and I am delighted to take this opportunity to pay tribute to the Labour party in Bristol which contributed greatly to those capital receipts. Whereas 5,932 council houses have been sold since the 1980 Act came into force, an almost equal number were sold in the years prior to 1980, when there was no statutory obligation to sell. For the major part of that period, the council was Labour-controlled. Therefore, I am delighted to pay tribute to that Labour party exercise of putting the interests of ratepapers and housing ahead of party dogma.
I do not wish to embarrass the Labour party too much, because its record does not compare well with the period when the Conservative party was in control. There were certain bureaucratic delays in selling council houses, but council houses were consistently sold when Labour was in control. Similarly, it is worth noting—again, I offer some praise—that partly as a result of the groundwork laid by the Conservative administration of 1983–84, the Labour party in Bristol, which is now in control, will next week propose a rate well within the Government's guidelines. It should be praised by its opponents for doing so.
The successful policy of selling council houses has led to problems in Bristol, because 1,400 prefabricated

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reinforced concrete houses have been sold—nearly 10 per cent. of the overall sales of PRC houses throughout the country. That is far more than was expected. I was therefore delighted to hear my right hon. Friend's assurance about the possible additional allocation of funds in this area. I assure him that I shall encourage the leader of the council and the chairman of the housing committee to submit an application tomorrow. But I hope that I shall receive a slightly more favourable reaction than I did in December when the housing chairman wrote to me complaining about the niggardliness of the HIP allocation. When I offered to arrange a meeting with Ministers to discuss the matter further, it was turned down on the ground that they would not listen.
Let us consider whether Bristol has done so badly under the present proposals. Its share of the 1985–86 generalised needs index increase for the south-west region is up by 4 per cent.; its share of the total funds available to the region are up by 9 per cent.; and its cash allocation, in the context of controlled public spending, has fallen by 3·1 per cent., against 11·9 per cent. for the region as a whole. Is that so bad at a time when public expenditure must be controlled?
It is probable that, had Bristol received the full housing improvement allocation for which it asked, it could not possibly have spent it. Nevertheless, the estimate is that in 1985–86, housing starts will be up by about 60 per cent., housing improvements by about 50 per cent., housing repairs by about 50 per cent. and grant applications by about 30 per cent. It is difficult to relate housing expenditure of that order to the stories that we have heard from Opposition Members about the effects of the regulations.
As a result of the measures that we are discussing, in 1985–86 Bristol and other local authorities will be able to spend 70 per cent. of their capital receipts. They will be able to spend 20 per cent. of previous receipts, together with 100 per cent. of net receipts from certain low-cost ownership schemes. Given the need for some Government control over capital spend, I do not consider that the limits that the Government have imposed are in any way unreasonable. They will not stop any realistic plans by Bristol. I shall be interested to hear whether a similar case can be put forward on behalf of any other local authority, because I assure Opposition Members that Bristol is by no means unique. Under the present proposals it will be able to make sensible and rational allocations for housing spend in the coming year.
I assure my right hon. Friend that I support the regulations and I am sure that the House will, too.
7.58 pm
Mr. Simon Hughes: The hon. Member for Bristol, North-West (Mr. Stern) has convinced me of one thing. I had thought that in the coming county council elections it was fairly certain that Avon would be lost by the Labour party, but no one in Bristol with any housing need and who was perhaps among the 33 per cent. of the electorate who supported the hon. Gentleman can look to him to provide sensitive support for the predicament of local people, and I shall be happy to distribute his remarks widely throughout Bristol. Not only did he fail to respond to any of the housing needs of the
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people of Bristol, but he failed to produce evidence—because there is none—of any authority, its officers or members, which supported the Government's proposals.
The hon. Gentleman may know that prior to this debate there was a lobby by the Conservative-controlled Association of County Councils, the Labour-controlled Association of Metropolitan Authorities and the Conservative-controlled Association of District Councils, which unanimously condemned this blatant social and economic folly of a policy.
Mr. Stern: From his detailed knowledge of the conditions in Bristol, which of the figures that I gave does the hon. Gentleman wish to change?
Mr. Hughes: If the hon. Gentleman will linger a while, I hope that he will hear sufficient argument to persuade him that what he has said is a load of rubbish.
The trailers are for a Budget for jobs next week, but we shall believe that when we see it. These regulations are certainly against jobs. An estimated 65,000 jobs will be prevented if the regulations go through, without putting back to work any of the remaining 400,000 people in the building industry whom taxpayers are paying £600 million in dole money to keep out of work.
Unlike the rate-capping proposals, which may find favour with some of the Government's supporters, I do not believe that the regulations will make economic sense or be acceptable even to them. Four groups of people are affected. Home owners and private landlords seeking improvement and repair grants will be disappointed, council tenants seeking the repairs so desperately needed will find that that work cannot be carried out. People on waiting lists for new council homes will also be disappointed, because in many areas no new council accommodation will be built. Finally, those who rely on housing associations to build or renovate accommodation will be told that the Government will not help.
As the Secretary of State knows, this debate in some ways is the crunch—the last of the horrors of the current Department of the Environment year. The Government dallied for a long time before finding a day to slip this in, hoping that not too many Conservative Back Benchers would notice or vote against it. They even made a small concession, altering the original proposals by adding a few crumbs from the table. Nevertheless, few people will be fooled.
The Government's proposals are unprincipled, illogical, inconsistent and inept. The statistics are telling. The Secretary of State, as usual, was selective in his use of statistics. The total number of housing starts, public and private, has fallen from about 322,000 10 years ago to under 191,000 this year. Local authority capital expenditure in 1984–85 is 40 per cent. lower than in 1979–80, and next year it will be 60 per cent. lower than it was when the Government first came to office. Public expenditure on housing will be a quarter of the total when the Government came to power, and 11 per cent. down on last year.
At least £325 million would have been available if the Secretary of State had left the prescribed expenditure limits at 40 per cent. for next year as they were this year. That is because, at the Government's instigation, £1·5 billion has been accumulated in unspent capital receipts since 1981. The English house condition survey four years ago showed one quarter of the housing stock to be

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substantially unfit. Last year 200,000 people could have obtained improvement grants, but that figure will probably be halved in 1985. I do not advocate municipal housing as the only solution—private and public housing and the voluntary sector should rightly operate in partnership—but municipal housing starts this year will probably reach their lowest since 1919—scarcely a record for the Government to be proud of.
The effects will be felt by all categories of the population. The old are perhaps the most vulnerable. Age concern estimates that 300,000 old people are now waiting to move into decent property. By the time the Government allow the money to be spent many of them will be dead. Those people will not go to their graves thanking the Government, and even then their families will receive a pretty rotten death grant to help with the funeral expenses. The capital allocation for housing in London will have been reduced from £1,400 million when the Government came to power, to about £500 million, although the problems of the capital are as bad as, if not worse than, those elsewhere.
I will tell the hon. Member for Bristol, North-West, with his accountancy background, why the Government's proposals are illogical, inconsistent and inept. They are illogical because Government policy is based on finance-led rather than need-led economics. I could not disagree more with that principle. Finance-led as it is, there is patently a profit on capital receipts. Local authorities have been selling assets at a profit. The Government's whole economic philosophy dictates that the authorities should be able to spend that profit to regenerate the economy by reinvesting and creating more homes and jobs. The Treasury Select Committee, which is far more expert in these matters, clearly agrees with that.
The present Government are the Government of the housekeeper's budget. Rather than frittering money away from day to day, the housekeeper is advised to save up and invest capital in important things. That is just what the local authorities have done, but having done as the Government wished and saved up their money, they are now not allowed to spend it. All they can do is look through the glass inner door at all the lovely money in the town hall safe. They will not be able to do anything with it. What use are savings in the bank when the owners—they are indeed the owners because it is their money, as the Secretary of State tells us almost weekly—cannot take the money out?
The folly and illogicality of the Government's proposals extend even further, because capital receipts do not increase the public sector borrowing requirement. Maidstone district council and other local authorities are not demanding to use the money to service their debts. They want to spend the money, so it does not enter the simple PSBR equation. Lastly, local authorities will not be able to accumulate so many capital reciepts in the future, because those receipts come primarily from the right-to-buy provisions and the most desirable properties have already been sold.
I have shown that the Government's policy is illogical, but why is it inconsistent? The inconsistency is most clearly understood if one reads the oft-quoted letter of 2 November 1982 from the Prime Minister to Sir Jack Smart. The hon. Member for Copeland (Dr. Cunningham) has already referred to that letter in part. I wish to quote just one sentence. The Prime Minister wrote to the leader of the Association of Metropolitan Authorities:
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"I feel sure you will agree that much investment is needed to plan for future economic recovery, and that the present time, when the construction industry has spare capacity is the moment to be making provision for those future needs."
The housing industry has even more spare capacity now and the housing stock is much worse. The important difference is that when that letter was written we were approaching a general election, whereas now we are not. I only wish that we were. The Government might then pay attention to the voices behind them and change their policies, which their own supporters increasingly clearly regard as crazy, both politically for the Conservative party and socially for the entire country.
It is also inconsistent because the Prime Minister says through her Secretaries of State, "We want to reward the prudent councils." Rate capping is about making sure that imprudent councils are punished and that prudent ones are rewarded. It is the prudent council which save the money which are being told that they cannot spend that money.
Mr. Beaumont-Dark: The unwise virgins.
Mr. Hughes: I shall not try to rival the hon. Gentleman's expertise in that matter. No doubt that could be a subject for an Adjournment debate. We are trespassing near to going off the subject. I shall resist the temptation.
Not one of these local authorities has done anything illegal or wrong. Therefore, according to normal Government philosophy, they should not be penalised. The carrot and stick arguments just do not apply.
If the money cannot be used to put the housing stock into decent repair, how do the Government imagine that they will increase the numbers of people who will buy under the right-to-buy legislation? If people live in a place that is in a pretty grotty state, they are less likely to want to acquire responsibility for it.
The Government introduced the Housing Defects Bill, which was passed by Parliament. Although a concession has been made which, in effect, amounted to, "We shall look favourably at those authorities which have to compensate people who bought defective Airey homes and the like," there is no guarantee that that additional money will be forthcoming.
What about the ineptness of the proposals? We need only refer to the draft report—I underline that it is a "draft" report—of the Audit Commission. As the hon. Member for Copeland said, the Audit Commission made similar points before the House rose for the summer. The Secretary of State has had to eat his words.
The greatest ineptness, however, is that the proposals do not recognise our needs. The inquiry into our housing stock, which is currently chaired by the Duke of Edinburgh, is due to report in July.
Mr. Tony Banks: He has a nice house.
Mr. Hughes: Yes, he has a nice house. I shall come to nice houses in a moment.
The provisional view of that inquiry is:
"the only clear message is a simple one: not enough is being done either to combat the shortage that exists, particularly in such areas as London, or to head off the looming disaster caused by the nation postponing necessary improvements and repairs to our existing homes. International comparisons reveal … that the United Kingdom has been continuously underinvesIing compared with similar nations, reaching a level in 1982 that is significantly lower than that for any comparable country."

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One need only look at any series of headlines in our papers to see that there is a need.
"Council investment curbs 'waste millions'"
is the trailer to the Audit Commission's conveniently delayed report.
A few days ago another headline stated:
"£19 bn needed to right council house defects."
The Guardian of 26 February stated:
"Bishops protest at 'lethal' housing."
"Inside Housing" stated:
"Don't abandon housing morality say Catholic bishops."
One headline stated:
"Problem flats 'need £2 bn for repairs'."
Another stated:
"More than a million homes 'unfit to live in'."
Just before Christmas the Financial Times described the Government's policy as:
"Scrooge rules in council housing".
Whatever authority one takes, it is clearly shown that the policy is crazy. For example, Maidstone council will be able to spend only £500,000 by non-housing projects. One project will cost more than that. Why should the council sell to raise the necessary money? For example, Sefton council, which is Tory-controlled, has written to the Secretary of State saying that his measures are losing support for the Conservative party at an alarming rate.
The Tory leader of the council wrote in November:
"I am very concerned that the Conservative Members on Sefton Council feel that they have exhausted their capacity and, indeed, their desire to explain away rate increases of the magnitude which is indicated for next year."
He continued:
"Our political support in this part of the world"—
Merseyside—
"is ebbing away at an alarming rate, both in Local Government and Parliamentary terms, and we are very concerned that the whole basis of our support is being undermined by the financial difficulties we face."
Eastbourne provides another appropriate example. That is the town where the Minister for Housing and Construction has his constituency, although I do not think that he lives within the boundary. In Eastbourne, 2,000 people are waiting for homes and 100 families are in desperate need of housing. That is what is happening in this so-called blue chip town on the south coast of England which is represented by the Minister for Housing and Construction. Many of his elderly constituents have been waiting two, three or four years for a transfer. Can the hon. Gentleman honestly say—I am sorry that he is not here, but I do not apologise for these remarks—when he has two homes, one of which is in London and the other in the south of England, that he can justify this poicy to the people of Eastbourne?
Mr. David Sumberg: We all have two.
Mr. Hughes: Not all of us have two homes. Some of us have to make do with one. I realise that some hon. Members who do not represent London may have to have two homes.
Can any other hon. Member say that he can justify that policy? The demand for bed-and-breakfast accommodation has increased and costs more than decent housing repairs would. It does not matter whether one talks about rural areas such as Cornwall, where people are in desperate need and are living in caravans while waiting for housing,
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or about inner city boroughs such as mine in Southwark—the problem is the same, and people cannot believe that the Government are so insensitive.
Mr. Tony Banks: The hon. Gentlman referred to the circumstances in the constituency of the Minister for Housing and Construction. What about the circumstances in the Prime Minister's borough of Barnet? There are 5,206 people on the waiting list and no fewer than 31,000 unsatisfactory dwellings in the private sector. The right hon. Lady sold one of her houses, in Flood street, for £250,000, so she is OK.
Mr. Hughes: Every constituency tells the same tale. Transferred GLC stock will not be renovated. Tower blocks in the inner city, such as in Bermondsey, Rotherhithe, Southwark or the constituency of my hon. Friend the Member for Woolwich (Mr. Cartwright) will not be renovated because local authorities are being told that they cannot spend the money that they have and wish to spend.
Why do the Government not wait until the Audit Commission produces its report and get the answer right? Why do they not wait until the internal review, by which the Secretary of State puts so much store, is carried out? What will the Government say to assure their supporters that next year they will not be told that they can spend not 20 per cent., but zero per cent. of receipts? The percentage has been cut to 50 per cent., 40 per cent. and, with this proposal, to 20 per cent. Why not make it zero per cent. next year? Why do the Government not say that they really do not know the percentage and that perhaps there will be no money left at all?
The Government are deaf to logic, but they are politically insensitive as well. Last month the National Home Improvement Council passed a resolution, with no votes against it, calling on the Government—having deplored their policy—to change their plans completely. The National Federation of Building Trades Employers that has said that it is now useless to try to persuade the Government by reasoned argument. The only thing to do is to get to Tories where it matters — in their constituencies. The Government's policy on this issue—when Britain's housing stock is so appalling and has worsened so much under their stewardship—is indeed illogical, inconsistent and inept. But it is also immoral. I do not believe that the Government can justify it for one moment longer. I hope that the prayer succeeds and that Government Back Benchers will be brave enough to support us in putting these regulations out of court.
8.18 pm
Mr. David Sumberg: I was going to begin by apologising to the hon. Member for Southward and Bermondsey (Mr. Hughes) for not commenting on his speech, but I must say that I thought his remarks about my hon. Friend the Minister for Housing and Construction and his two homes were unworthy. They showed the lack of understanding by London Members of Parliament of the need of those who serve constituencies outside London to have two homes and two bases so that they can act as proper Members.
I want to set out as concisely as I can the reasons why, for the first time since I became a Member, I shall not support the Government but shall vote for the prayer. The House should consider the background to this debate. I

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have no hesitation in saying that one of the Government's most successful policies and one which will live for years with those who benefited from it, is that which allows council house tenants to become home owners.
The right-to-buy law which was brought in during the Government's first term of office and which has been extended and improved during the present Parliament has given hope, freedom and encouragement to literally thousands upon thousands of council tenants. They are now free from the state and the local authority and, most importantly, they are free to move their home and thus can achieve at a time of high unemployment the essential advantage of mobility of labour.
When the arguments on this matter raged, in the House—I refer to the legislation which allows council house tenants to buy their homes — and outside, the Conservative party always maintained that its policy had two essential objectives. The first, as I have already summed it up in a Churchillian phrase, was:
"to set the people free."
That we have done and are continuing to do.
The second objective, which was equally crucial to the success of the policy, was to translate the houses into cash so that it could then be used for the benefit of the whole community. That was the answer that we always gave to our political opponents who at the time accused us of dissipating national or, perhaps more precisely, local community resources. The right-to-buy legislation was bitterly opposed by the Opposition. It ill becomes them, therefore, to come to the House as "Johnny come latelies" complaining that local councils cannot use the money that they never wanted them to have in the first place.
Mr. Tony Banks: The Opposition still object to forcing councils to sell their council stock. The hon. Gentleman must recognise that capital receipts are based on the sale of unrequired land as well as the sale of council houses.
Mr. Sumberg: Of course I recognise that, but cash from council house sales is also an important ingredient. The cash receipts, which, as the hon. Gentleman said, come from a variety of sources, can be used by the local authorities for a variety of purposes. Some of them have already been mentioned: homes for the elderly, home improvement grants and—that much maligned and overused phrase—improving the infrastructure. They can all be used to enhance the community and are proper and better uses of public and taxpayers' resources. They will all increase employment. They all reflect great credit on the Government and the Conservative party.
There was a powerful incentive for local authorities not just to obey, or to go through the motions of obeying the law, but positively and aggressively to market the policy. My authority in Bury is a perfect example. The Conservative-controlled local council has the best record, in percentage terms, for the sale of council houses in Greater Manchester. The implementation of the regulations will affect it badly. The consequence is that Bury's spending power for 1985–86 will be reduced by some £600,000. How can I justify this to my good friends on Bury council who have steadfastly followed the Government's line on local government spending, and how can they in turn justify it to their political opponents in the council chamber?
My right hon. and hon. Friends at the Department of the Environment will argue—they already have—that
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this reduction is merely a postponement and that it does not abolish "at a stroke" the local authorities' right to spend—if I may use this phrase—their own money. All that is true, but a postponement, if it means anything, means that worthwhile schemes that were planned for 1985–86 will not now take place that year, and may never take place. Whatever meaning we apply to the word "postponement", genuine jobs that could have been created and could have dented the 17·5 per cent. unemployment rate in my travel-to-work area will never be created.
I have supported loyally and steadfastly the Government's actions to curb local government extravagance and I shall continue to do so, but what hurts me most about the regulations is that they do not attack our political opponents; they attack our friends. It is directed not at those local authorities which dragged their feet over the sale of council houses, which prevaricated and put obstacles in the way of anyone wanting to buy their council houses, but at authorities such as mine that faithfully, vigorously and loyally applied the policies of the Conservative party and the Government.
I regret that the course of action that I shall take affects my right hon. Friend the Secretary of State for the Environment and I am sorry that he is not in his place. He was kind enough to come and support me at the last general election and I was grateful for that, but I am afraid that he and his colleagues are, victims of Treasury policy. They are victims of policies which in this regard I find it increasingly difficult to understand.
I am not a natural rebel. Some of my right hon. and hon. Friends find it easier than I do to defy the Whip and vote against the Government. I believe that this Government are the only one that will bring economic prosperity not just to the country but the region that I have the honour to represent. When I signed early-day motion 283 on this topic I knew what I was doing and w hat the consequences could be. By signing it, I was keeping faith with my constituents and Conservative councillors in my constituency, but, above all, I was hoping against hope that even at this late hour the Government would think again. That they have not done so is something that I regret. It gives me no satisfaction, but equally it gives me no alternative.
I shall vote technically with the Opposition tonight, but they cannot be satisfied with their record in these matters. I shall, in my heart, be going into the same Lobby as those of my right hon. and hon. Friends who believe that in this instance the Government have it wrong, that a voice must be heard, and that a vote must be recorded tonight for those Conservative-controlled local authorities that in hard times have kept faith with the Government.
8.29 pm
Mr. Bill Michie: I congratulate the hon. Member for Bury, South (Mr. Sumberg) on his good and courageous speech. I agree with much of its content, but also disagree with much of it.
These regulations are an attack on local government decisions and local democracy. During the past few years local government has taken a tremendous hammering from central Government. The regulations are yet another blow to local authorities, which do their best to carry out their democratic duties to their electorates.
We have disagreements about grant-related expenditure assessments, rate capping, local government policies and

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many matters for which local government is responsible. Obviously, I would defend my local authority on all those issues. However, on this issue we are getting at the infrastructure not merely of the nation, but of democracy and decision making. As the hon. Member for Bury, South made clear, for some reason local authorities cannot use the money that they own. Any further reduction in the powers of local government will have an effect which even the Government would dislike. I am thinking of complete cynicism about whether it is worth taking an interest, voting or serving in local government. That would damage the nation's democracy.
I have read many of the Government's papers on the matter, but cash limits still seem to be arbitrary, and I cannot find anything fundamental on which we can have a logical discussion. I am not an accountant. I am glad of that, because the more I listen to them the more I feel that there is no soul in the world. The hon. Member for Bury, South convinced me that most accountants have no soul, let alone understanding.
The Government do not take account of the ability of local authorities to spend capital receipts from previous years. As a result, local authorities which have played by the rules and not acted illegally find that they have an excess. Nationally, local authorities exceeded cash limits in 1983–84 by £368 million. The latest estimates for 1984–85 are between £600 million and £1,500 million.
Those problems were not self-created. They resulted from authorities responding years ago to Government instructions about planning ahead. Authorities which have not acted illegally, but have carried out the wishes of central Government, now have to pay the price for it. It is bad enough that it affects local authority services, but it also affects jobs in the construction industry.
The Building Employers Confederation, which sent a letter to most hon. Members, has frequently been quoted. I read with interest the latter part of its letter, which stated:
"The rules governing the use of capital receipts have proved increasingly complex and cumbersome"—
we do not need to be reminded of that, but it is interesting that it comes from that source—
"resulting first in an underspend and then in an overspend. The proposed changes represent further tinkering with the system and cannot rule out possible further disruption to local authority spending in 1985–86. Long-term capital programmes cannot be run effectively on a system designed to meet a one year cash limit. The Government's proposals will further confuse not clarify the situation and will contribute to a significant fall in the construction industry's workload."
The letter then strongly urges the Government to reconsider the matter, and me to vote against the regulations, which is precisely what I shall do.
The regulations affect both big and small businesses. I had the privilege to meet a new group of small business men in Sheffield, in particular those in the construction industry, who have set up a consortium to guarantee a high standard of work and to protect clients in the public and private sectors. Over the years some of the building firms have received bad publicity, and bankruptcies have caused distress to clients. I applaud the initiative of the private builders in joining together to ensure the maintenance of high standards and guarantees. They have undertaken that at their own expense, which I also applaud. Although they are prepared to do that, they admit that from year to year
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they do not know whether they will have orders or jobs. Even orders in the pipeline may have to be reversed because of the regulations.
It always make me smile when I recall the 1979 election, and occasions since then, when the Prime Minister urged people to vote for a Tory Government because they would look after the private sector, especially small business men. At present, proposals such as these can do nothing but reduce the chances of small business men, no matter how hard they try to remain in business and to employ people.
The regulations also affect the Government's plans. At Question Time yesterday the Minister for Health, in answer to a question, said:
"We shall continue to encourage the development of services that enable people in need of care to live as normal a life as their condition allows."—[Official Report, 12 March 1985; Vol. 75, c. 139.]
All hon. Members will applaud that. I recognise that money has been set aside in GREAs for that purpose. However, the Government are wrong in thinking that that can be taken in isolation. Bad housing, closing hospitals and not having the capital receipts to adapt homes, makes the position worse. Therefore, the principle may be right, but the regulations work against what the Government claim they seek to cure.
There seems to be little response to the points raised by organisations, such as the Association of Metropolitan Authorities and others. Recently, I read a resolution of Sheffield city council, passed on 9 January 1985. I fully agree with its principle. The council
"expresses its grave concern that, despite strong representations concerning the level of capital allocation in respect of the City's schools, this year's announcement … will … increase the difficulty of maintaining a reasonable physical environment in many Sheffield schools in line with statutory obligations … requests the Chief Executive to write to the Secretary of State for Education and Science expressing the Council's concern and reiterating the Council's request for an urgent meeting with him to press for a review of this allocation."
It is obvious that such resolutions come not only from places such as Sheffield, but from many other local authorities. The regulations will have a tremendous effect on local government infrastructure.
In Sheffield the projects that will be affected are endless. In the housing sector we have an allocation loss of £4 million, which is 15·6 per cent. in cash terms, and a loss of capital receipts of £7·3 million. The proposals will affect remedial work on tower blocks that suffer from structural defects; remedial work on inter-war estate dwellings that suffer from wall-tie failure; the demolition and replacement of more than 2,000 houses, on one estate, which suffer from acute wall-tie failure, the modernisation and planned maintenance work on inter-war estate dwellings, of which 24,000 remain unmodernised; repair and renovation grants to private sector dwellings; further enveloping initiatives; and new council house buildings, especially for the elderly. I remind the House of the Government's stated willingness to look after the community and to bring more of those people into community care. Remedial work on post-war houses and the contribution of the slum clearance programme will also be affected.
The projected allocation loss for non-statutory housing in Sheffield is £800,000, or 11·1 per cent. in cash terms, and the projected loss of capital receipts is £3·7 million. Another great worry is that the council will be unable to carry out the work which any responsible authority should

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do for services such as the fire precaution work recommended by the county fire officer in homes for the elderly and the mentally handicapped — the most vulnerable in society. It will be unable to adapt homes for the seriously disabled, including the provision of stairlifts, downstairs toilets and ramps. That may seem like small fry, but it is not for those who live in houses where such adaptations are not made. It is a strain not only on those people but on the social services, which are criticised for spending too much in those areas. The fact that the building programme is not going ahead means that those people cannot be rehoused in more suitable accommodation. The people of Sheffield lose out in every way.
The council may also have to abandon a support unit that would allow the mentally ill to lead independent lives. It may also have to abandon special units for the elderly, which at present are geared to ensuring that the elderly believe that they have a role to play in society and that, given the opportunity, they will do so.
It is interesting to note that many of the schools that will be affected by the regulations are in the only Tory constituency in Sheffield. I wonder how the parents of the children in those schools will react? We are talking not just about knocking down a wall here and putting in a window frame there; we are talking about, for example, a new roof for King Edward secondary school, through which water is pouring at present. If it does not get a new roof, the structural damage will continue to the point where it is no longer habitable. It is obviously false economics, but, under the regulations, it is not likely to get a new roof.
The proposals will also affect the building of new schools and improvements to schools throughout the city. A great problem in the country has been the removal of asbestos from public buildings, including schools and colleges. Again, that is likely to be affected by the regulations. The council will have to abandon or delay plans for energy conservation and its proposals to integrate handicapped children into mainstream schools. We shall lose the improvement programmes for Hunter's Bar first school, Tinsley nursery and infants school and Southey Green school. The planned expansion in nursery provision will probably also go out of the window.
Despite the Secretary of State's claim this afternoon that more money is being made available, the Government cannot claim great success for their policies. There has been success in some areas, but not as much as there should have been. All caring local authorities, all persons in need of proper accommodation, whether children in schools, old-age pensioners waiting for custom-built homes, and even the Government's ex-friends—I say that because I believe that they will lose a few of them — in the building industry know that the policy is nothing short of a long-term recipe for disaster.
8.43 pm
Mr. Robin Maxwell-Hyslop: Many aspects of the control of capital expenditure by local authorities have been mentioned in the debate, but one is of special concern to me. I start from the principle that if a Government pass legislation placing new expenditure burdens on local authorities, they must make proper provision for the discharge of those burdens. During 1984, the Government put through Parliament an Act which did not apply to everyone in a certain financial bracket who lived in defective houses, but to one category of those who owned defective houses—those who bought them from
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local authorities. The Act placed on local authorities an absolute obligation on demand to purchase back some categories of defective houses, including Woolaway and Cornish unit houses, although there are others.
However, that does not end the financial consequences which fall on local authorities. Having purchased back those houses, not at a price related to what the house-owner paid, but at a price related to the current market value, that family has to be rehoused. It cannot live in the house while it is being demolished or while its corroded steel structures are being replaced. Therefore, the council must buy back the house, rehouse the family—
The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts)indicated dissent.
Mr. Maxwell-Hyslop: Of course, the family can sleep in the street? The family will be homeless, so it must be rehoused. The same problem applies to those who live in such houses, who have not exercised the right to buy. It may be true that the repair of such houses is extremely uneconomic in view of their remaining economic lives. It might be better to demolish them and to rebuild.
My complaint is that, having placed that statutory provision upon local authorities, no provision has been made in their capital allowances to discharge it. It is all very well for the Secretary of State to say that he was unaware of this until last night. That is an absurd claim; I wrote to him eight days ago and sent a copy of my letter to the Chief Whip. If he was unaware until last night, that is his fault, not mine. The matter has been discussed frequently with Ministers. The cost of the burden could represent a huge proportion of the estimated capital spend of small councils. I recommended to my right hon. Friend that expenditure under the Housing Defects Act 1984 should be outside the capital controls which this prayer seeks to annul.
It would also be extremely sensible, because the problems of councils with a minute spend are wholly different from those of councils with a large spend, to have a de minimis rule on the control of council capital expenditure, so that a council spending, for example, less than £5 million a year would not have this cumbersome mechanism, which will cost central Government a great deal to operate, thrust upon it. Councils with a posture of low capital spending have demonstrated that they do not need such cumbersome control mechanisms anyway.
In his opening speech, my right hon. Friend the Secretary of State gave some encouraging signs—that is the only word I can use—so worded as to commit himself to nothing. My right hon. Friend is extremely generous and courteous in receiving deputations. The only trouble is that nothing happens after he has received them. There is no reason to suppose that that pattern from the recent past will not be repeated in the future. The form in which he gave his undertaking, after quite adequate notice to think the matter out clearly and thoroughly and to obtain the agreement of the Treasury, was worthless. If he had intended it to be what is being asked for by many of his Back Benchers, he knows perfectly well that he could have phrased it so that it was an actual commitment.
For years Ministers have said that they will consider matters put to them sympathetically, and they do, but their sympathy is all that we get. One cannot buy back defective houses or rehouse people with sympathy. It is no good saying that if one buys back a house the person concerned

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can rehouse himself. What happens in the part of the country that I represent is that any houses for sale are snapped up by those retiring from the midlands. Therefore, they are priced out of the reach of local people. That option in very many cases simply does not exist. That is why what will have to happen, in the representative case, will be the council rehousing the family where there is a buy-back under the Housing Defects Act 1984.
I should like to be told by the Minister when he winds up whether I am to be invited to believe that Ministers did not think of this when they introduced the Housing Defects Act 1984. Is the Secretary of State really inviting us to believe that he did not think of it until, by a happy chance, last night he read my letter? That is not, I am afraid, a very dignified posture for Ministers to adopt, nor do I believe it to be a truthful one: yet that is the apparent import of my right hon. Friend's remarks. We want better government than this. We are entitled to expect it, and we shall not get it by voting tonight against the Prayer.
8.51 pm
Mr. Gerald Bermingham: My constituency is situated in an area of high unemployment. I have a number of interests in this matter, which I shall gradually declare during my speech. The other day I received a letter from the director of finance in the borough pointing out the exact implications of the imposition of these regulations for the housing stock in the borough of St. Helens. Out of a total stock of 69,000 houses in the borough, 14,000 were built before 1919. A recent survey showed that 16·3 per cent. of the housing stock is unfit because it lacks certain amenities.
It would be instructive to look at the local authority's plans for the last year for which figures are available, namely, 1984–85. During that year it planned to make 2,147 toilet alterations. I am referring to houses which do not have baths or indoor toilets. One would have thought that in any reasonably civilised society in 1985 the provision of indoor toilets was a basic necessity.
The hon. Member for Bristol, North-West (Mr. Stern) gave the House a good accountancy demonstration. I have never understood balance sheets. They always seem to prove that one is making a profit, when in fact one is making a loss. The reality, however, is that my constituency is no different from any other constituency where thousands of homes have no indoor toilets. Local authorities up and down the country, regardless of whether they are Conservative or Labour-controlled, have used capital receipts to install toilets and baths in houses. As my hon. Friend the Member for Sheffield, Heeley (Mr. Michie) said, local authorities have used capital receipts to install ramps for the disabled and handles on baths, but the Government have laid regulations which will reduce the right of local authorities to spend capital receipts for this purpose.
I listened carefully to the Secretary of State's reply to the speech of my hon. Friend the Member for Copeland (Dr. Cunningham). I could not find any rationale in what he said. The House has not been given an explanation of why capital receipts are to be cut by 20 per cent. The Government say that they have been over-generous with their housing improvement grants. I asked my local authority to supply me with the figures. In 1981–82 the housing investment programme allocation for St. Helens
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was £5,978,000. Taking into account the effects of inflation since 1981–82, the HIP allocation for 1985–86 is £5,775,000. That is a 3 per cent. reduction on 1981–82. In fact, it is a 17·5 per cent. reduction on 1984–85, when the amount was £6,775,000. In volume terms, between 1981–82 and 1985–86 there has been a reduction of about 20 per cent. This has happened at a time when the metropolitan boroughs have been suffering from an escalation in unemployment and increasing housing needs.
According to the housing survey of 1984, council-owned properties in the borough need £27·2 million to be spent upon them to carry out outstanding repairs. This is the position in a town where many building workers are out of work. Although £27·2 million worth of repairs need to be carried out, the borough's allocation for 1985–86 is to be only £5,775,000. Furthermore, our capital receipts are being cut back. The logic of it defeats me.
As I said in an intervention to my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), it is all very well for the Government to say that councils should put the money generated from excess receipts in a bank and live off the interest or lend it to somebody else for the interest. The repairs that will not be done this year, the buildings that will not be built this year, the jobs that need to be done and were being done with capital receipts and will not be done, will cost us a little more than interest rates in excess payment next year. At the same time, we shall leave many people out of work.
According to a parliamentary answer that I received the other day, at the end of 1983, the last year for which statistics are available, out of all those out of work, 275,000 people have shown the construction industry as being their last place of work. In other words, 275,000 construction workers are on the dole, and that costs the state a lot of money. At the same time, all this work needs to be done, but the Government just say, "Cut back and do not do it." The elderly and the badly housed are the ones who will be affected most, and invariably it is the elderly who live in the worst housing conditions. At the same time, the 275,000 construction workers are on the dole. It will not cost the state anything in what I can only call their cowboy economic policies to try putting a few of these people back to work to relieve the misery and the poor housing conditions in which so many live.
If the Government are proud to run a country in which there are 1 million homes which are unfit for human habitation, of which about a quarter do not have running hot and cold water, they mark themselves as a Government without care. I hurl that charge at the Secretary of State and I wait with some interest to hear his reply at the end of the debate.
We are talking about whether repairs will be done. This applies not just to council houses, because there are millions of houses in the private sector, both rented and owned, which because of age and deterioration, need improvement grants, repair grants and insulation grants, which used to come out of the capital receipts and other HIP money. They will not get them. How often have hon. Members had people at their surgery—I have them every month—who say that they have put in for a grant but the council has told them that it does not have any money. There is not one Member of Parliament who does not face that problem.
I await with interest to see what will happen on Tuesday in the Budget. I doubt that there will be very much from our point of view. It will be another non-exercise.

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Ordinary people, whose houses are in need of essential repairs, will not get help in the Budget, although the money is there.
The Government's theory with the PSBR is that if they do not allow councils to spend £5 billion, that will notionally reduce the apparent local authority debt. I suppose that that looks good on paper, but are we in the business of looking good on paper, or are we in the business of making homes that are fit for people?
I declare one of my interests in this matter. In my constituency there is a large company that makes bricks. That company cannot sell its bricks unless we start doing repairs.
Mr. Tony Banks: The Secretary of State just drops them.
Mr. Bermingham: I hear my hon. Friend.
The company cannot sell its bricks unless people are investing in new build. We have heard a lot about inward investment, and I welcome industrial investment and pray that there will be more. Yes, the total investment in the country is going up, but it is not going up fast enough, and we all know that it is not creating jobs for the 4 million plus who are unemployed. In one little sector—housing—there would be funding for jobs which would not affect the Government's overall borrowing requirement. The money is there. Why on earth do we not use it? There used to be an old adage in accountancy books that one had to speculate to accumulate. I suggest that the Government speculate on housing and we might accumulate a slightly better housing stock.
I declare another interest, as Pilkington Bros., one of the largest glass manufacturers in the country, also has a factory in my constituency, and I am worried about the effect of these policies on the glass industry. That company employs 10,000 people in my constituency, and that is an awful lot of people. In last year's budgetary effort the Chancellor put VAT on housing improvements and double-glazing and there has been a 30 per cent. fall in the volume of orders. Therefore, less glass is being made. If this order goes through and we cut back further on repairs, even less glass will be used. Thus, another of our important industries will suffer from the problem of artificial cutback.
Anybody who knows anything about industry knows that price depends on volume. The more one produces, the less the unit costs, the less the price of the product and the more competitive it is. We are in the ludicrous situation that some glass is coming in from abroad at a price which is less—this is particularly true in the glasshouse type construction—than the price at which we can buy the raw materials. The Government seem not to appreciate that such industries as the brick and glass industries suffer as a result of their policies which do not take the realities into account.
The cutting back on permitted expenditure of capital receipts affects my constituency in three ways. It does not give the unemployed in my constituency the opportunity to work in the construction industry, which they desperately wish to do, it harms and affects the brick and glass industries, and above all it harms and affects those in society who are least able to defend themselves, the elderly and the poor, who are invariably the worst housed and live in the worst conditions.
I ask all hon. Members to support the prayer against the regulations. While this will not change the economic
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policy overnight, it will give the elderly, the handicapped and others in need the prospect of a slightly better life. I reckon that that is no bad effort for the House to make tonight.
9.6 pm
Mr. Anthony Beaumont-Dark: In a world of local authorities of different political persuasions, from the extreme Left to the Right of the Conservative party, what is it that can get Solihull to agree with Greenwich, Westminster council to agree with Barnsley, Lewisham with rural Suffolk and Essex with Sheffield? In the House today, there was a meeting of three diverse council associations representing councils from all over the country—the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities. I know a little about councils as, indeed, all hon. Members know a little about politics. That these three organisations and some of the councils that I have mentioned can meet and agree about the problem from which they suffer, although not necessarily about its solution, I should have thought would make any Government, and particularly my own Government, reconsider whether their policy is wise.
Councillor Mrs. Kirwan of Westminster wrote a letter, not a private letter, to the Secretary of State—I think that it was sent to nearly all hon. Members—in which she said:
"Mr. dear Patrick,
I have waited until now to write to you as I did not want to over-react to your HIP announcement until I had seen the full document. I have now seen this, and must say I am appalled at its content".
Throughout the letter, a good Conservative chairman of a committee indicates that she is worried — a concern which has moved her to write to other Conservative Members of Parliament and say:
"I feel as though I have been kicked in the teeth—the more so as Westminster has always backed government policy and has pioneered so many new ventures in furtherance of our Conservative beliefs".
One of the leading members of Solihull council—Solihull is not known as a Left-wing part of the country—has come to the House of Commons to join people from Sheffield, an area that bears no great political resemblance to Solihull; but then, Sheffield bears little political resemblance to any other area.
We must listen when such people come here united and say — as Councillor Lewis of Solihull said — that authorities need some certainty, stability and consistency. Nobody is saying that the PSBR is nonsense. Indeed, as a member of the Select Committee on the Treasury and Civil Service, and having had a modest hand in the report that the Committee issued, I appreciate that we said that the local government expenditure that was being stopped really had nothing to do with local authorities but everything to do with a global policy.
The Government, being on the make, saw a chance—not having been able to control expenditure in the way that they should properly have controlled it—and felt that it was like winning the pools; millions of pounds resulted from the activities of councils which had loyally followed the policy of selling council houses. That has indeed been one of the best policies that we have followed. The Government regarded that as a way of balancing the books.
It has been the economics of madness to tell councils one year, "Spend, spend, spend," and the next year to tell

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them, "Hold it. We did not mean spend, spend, spend but just spend." Is it any wonder that councils do not trust Governments?
We are talking about capital projects. They sometimes take years to plan and bring to fruition. It is no good blaming councils for doing what they were asked to do two years ago and what the Government say they should not do now. It is not their fault if, once a contract is given, it costs hundreds of millions of pounds to cancel.
The Audit Commission—the report of which, being another of those private reports, has not yet come out but which many of us have read — says that about £500 million is wasted by the ridiculous policy of "Stop, start; spend, stop spending." Councils must get confused in such a situation.
Much confusion surrounds the problem about which we are talking tonight. Who of us, if we have water coming through our roofs, a damp course that has rotted or woodwork that is so wormy or rotten that one can push a finger through it, will say, "I will not see to it this year. I will do it next year or, if not, the year after that." If we do not spend £1 million his year doing such work, it will cost £1·25 million next year and probably £2 million the year after.
As the Lewisham authority, which is some way from my constituency, made clear today, even in terms of saleability—this applies whether or not one agrees with the sale of council houses, a policy with which I strongly agree—the more houses are left to decay, the less saleable they will be. It is obvious that people are less likely to want to live in a rundown area.
Throughout the land there are hundreds of thousands of pre-1918 houses. They may not be as distinguished as Weston Park, but they still need to be repaired and they, too, are people's homes. They are not as precious as monuments, but if we do not do something about them, they will stand as monuments to neglect. Then, they will have to be torn down and rebuilt at far greater cost.
There is in Britain a crisis of dilapidation. There is no city in the land, be it my city of Birmingham, or Manchester, Liverpool, Leeds or London, where dilapidation is not prevalent and accelerating. Decay is a geometric progression and although someone might say, "Let us save a few million or a billion pounds by delaying certain work," it is financial nonsense to think that by putting a figure on one side of a balance sheet, all will be well next year. Usually there is another crisis, so there is another reason not to keep the promise that was made.
Surely we should kill two birds with one stone. We should do the right thing by people and by the Government's word. The Government told local authorities to sell council houses. Barnsley said that it was against that policy. That does not surprise me. Representatives from Barnsley came on a little visit to London on one of those rackety trains. They were told that if they sold council houses they would be able to use the money for more important things. The council believed the Government. Sadly, it was wrong to do so. Now it finds that it will have to wait an extra two years to do its slum clearance.
In terms of human misery I cannot believe that cutting £1 billion off the PSBR will be as important to people in this country or to those abroad as doing something about the infrastructure. We must remember the backlog. People
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now in their 20s will still be living in slums when they die in their 70s; that is what the problem is about. Expenditure of at least £15 billion is needed not to cure the problem but to contain it. The Government misunderstand if they suppose that cutting £1 billion off the PSBR will cause people abroad to rub their hands and say, "What a sensible country."
Should we believe figures from economists? Often I do not; the only certainty about five economists is that they usually have six opinions. It is estimated that capital expenditure of £500 million can create up to 65,000 jobs. Surely it is important to create 65,000 jobs. As failure breeds despair, so success breeds further success. The Government would benefit if people could see that their homes and their environment were being improved. The Government should be willing to do something about them instead of always talking about tomorrow, because the problem is with us today.
If the Government do nothing, they will lose on two counts. They will lose because people know that their policy is not common sense. They know that we have not really found a way to save money but that we are only delaying the solution to a problem that should have been solved yesterday. Tomorrow it will cost much more.
Let me give a few examples. South Ribble will have to cut £1·4 million from council house improvements. Cheltenham will have to cut £2 million from its renovation grants. In Derby, there will be a reduction of £3·5 million in improvement grants. In my own city of Birmingham, there will be a cut of a modest £14 million off a programme that we were trying to cope with 14 or 15 years ago. In Hertsmere, £3·5 million will not be spent on improvements; in Ipswich, the figure is £750,000. The list of dishonoured promises goes on.
It is not too late for Ministers from the Department of the Environment to ask Treasury Ministers to see the sense of spending the £5 billion. The money would not be spent recklessly. It might not even be spent in this financial year, because authorities would have to plan to spend it. They are being asked to reduce notional targets. Let us give a go-ahead and hope to local authorities. The people would gain; the Government would gain in respect and the country would gain in prosperity.
9.20 pm
Mr. Tony Banks: The regulations represent another blatant attempt by the Government to manipulate local authorities' finances. Indeed, local authority finances are being used as a stop-go mechanism within the economy, rather in the same way as the car industry was used in the 1960s. I should have thought that by now it would have dawned on the Secretary of State that the House has become tired of the gross interference by the Government in the affairs of democratically elected local authorities.
We all know that the regulations seek further to restrict the ability of local authorities to spend their capital receipts. The Secretary of State said that about £5 million of accumulated receipts are waiting to be spent. The House has a right to ask why there is so much money waiting to be spent. The first reason was the moratorium on housing investment at the end of 1980, which so disrupted programmes that it took local authorities two years to recover. The second reason is that the Government grossly underestimated the level of receipts from council house sales.

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The Opposition opposed the compulsory sale of council houses, and that remains our policy, but having been forced to sell the houses against their wishes, it is morally unjust that those local authorities are not allowed to spend the money accumulated in the banks.
Although no individual council overspent, the councils have collectively breached the Treasury's cash limit. As hon. Members on both sides of the House have said, none of those authorities has in any way acted illegally. We understand that the Government are reviewing the expenditure control system. I want to ask the Secretary of State a direct question; will he at some later stage prevent local authorities from spending their accumulated receipts altogether? Are there any thoughts in his mind, or proposals gradually coming to the surface in the Department of the Environment, which would prevent local authorities from spending accumulated receipts? If the answer is no, if there are no such proposals and if it is not his intention to produce any, by what percentage will the receipts' spending be reduced in subsequent years?
The Secretary of State has made great play of the fact that the regulations do not stop spending altogether — merely even it out and slow it down—and that councils will be able to spend the accumulated capital receipts. The right hon. Gentleman must make it clear, and give a cast-iron guarantee, that the accumulated receipts—which are rising because councils are still selling houses—will be available to be spent.
The Government argue that breaking the cash limit is bad in itself. However, since the cash limit is only a number, they are also arguing that spending accumulated receipts increases public borrowing and therefore threatens the public sector borrowing requirement target. That appears odd to hon. Members on both sides of the House. If receipts are already in the bank, they need not be borrowed. Indeed, no new borrowing is involved when receipts are literally kept in a bank account gaining interest. The Secretary of State set a figure of £5 billion on accumulated receipts. What proportion of that is sitting in bank accounts? I do not think that he heard my question, so I shall repeat it. He is still not listening, but perhaps I will get through to him eventually. What proportion of the accumulated receipts is sitting in bank accounts?
If the receipts are used for other purposes, such as paying off debts and lending to other bodies, once the right to spend that has been conferred is used, they must, in effect, be borrowed back. That is the Government's argument. There are two flaws in the argument. The receipts were not spent in the years in which they accrued, so the Treasury's public sector borrowing requirement target benefited at that time, and the effect was to reduce borrowing in that year. However, as the local authorities were accumulating within the rules it seems immoral not to return the benefit to the housing programme, especially as the underspending that created the problem was caused primarily by the Government.
Mr. Patrick Jenkin: Will the hon. Gentleman give way?
Mr. Banks: No, I will not. The right hon. Gentleman refused to give way to me. That is known as poetic justice. The Secretary of State or the Minister may give the answer when he replies to the debate. If he pays attention, he may get the arguments straight for once.
Secondly, the treatment of receipts in the national accounts makes nonsense of the PSBR concept. Receipts
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are treated as negative spending, so the PSBR is totally unrelated to the amount borrowed. As the Treasury and Civil Service Select Committee pointed out a couple of years ago, receipts are being used by the Treasury to massage the PSBR downwards so that the Government can appear to be meeting their borrowing targets. The arguments for more investments in housing are clear and have been stated by hon. Members on both sides of the House. There is a massive need for more investment in housing. In London, the housing investment programme allocation has been cut from £560 million this year to £480 million in 1985–86. That is a cut of 19 per cent. in real terms. The London boroughs, both Tory and Labour, bid for £1,500 million.
The capital receipt cut which we are now facing is only the latest in a long series of housing cuts. Since 1979–80, the provision for local authority housing in London has been cut by well over 50 per cent. in real terms. The cumulative loss has been over £3,000 million at current prices. What, then, can one make of the 1983 Conservative general election manifesto pledge to make Britain the best housed nation in Europe? The Government have a strange way of making good that pledge. It is nothing more than a sick joke and a good illustration of the two-faced attitude of the Government.
Newham's bids for housing capital allocation for 1985–86 totalled £78·3 million. The Secretary of State has specified an allocation of £21·5 million, a reduction on Newham's 1984–85 allocation of 11 or 12 per cent. in real terms. Under the regulations, only some £4·7 million will be available from housing capital receipts.
At this point we must do some arithmetic. The specified housing capital allocation for 1985–86 is £21·574 million. That is slightly less than Newham's estimate for payments on commitments, which is £21·824 million. The £4·7 million of capital receipts is very little more than the borough's own estimate for payments on statutory grants, now running at £4·258 million.
Assuming a certain overstatement on statutory grants, the Secretary of State has in effect provided a balance of £192,000 for all other categories of new housing capital expenditure in Newham for 1985–86. That is ludicrous, when one considers the problems of the borough.
In letters sent to the London boroughs, the Department of the Environment has set out policy objectives and asked the authorities to concentrate available resources on those with special needs — the elderly, the disabled, the homeless and those who cannot afford to buy. Newham has been given £192,000 to deal with those categories. Can the Secretary of State or one of his bright officials tell our councillors which category they should choose? Should they build an additional hostel for the homeless, or preserve the existing low-cost home ownership schemes? It is choices such as those that Newham will have to make.
Mr. John Maples: The hon. Gentleman is telling us about homelessness in his borough. How many empty council properties are there in Newham?
Mr. Banks: I cannot answer that question offhand. However, many properties are empty because they are not fit to be lived in. The hon. Gentleman may not know much about Newham or about our 110 tower blocks. He may, however, have heard of Ronan Point and the Taylor Woodrow Anglian blocks. Those blocks were jerry-built,

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but can we get hold of Taylor Woodrow Anglian now? No. It has gone out of business. Taylor Woodrow still has money to give to the Conservative party, but Newham cannot get compensation for its jerry-building. Newham has to get people out of Ronan Point and another five TWA blocks, but the Government will not provide the money necessary to replace them and stop people living in fear.
I do not believe that Conservative Members, least of all Environment Ministers, appreciate the scale of Newham's housing problems. Housing problems are the most common ones that are brought to Members of Parliament. That is certainly the case in my advice surgery. Less than 10 per cent. of Newham's population earn enough to qualify for a mortgage—so much for moving into the private sector—but 90 per cent. of all new housing in the borough is private. Much of it is coming through the London Docklands Development Corporation. The great majority of the people of Newham cannot afford to buy those nice posh houses which are being built in a derelict part of the borough.
I shall give some more statistics. I know that statistics are boring, but these are essential to Newham. There are 4,600 people on the waiting list, 13,400 unfit dwellings, 30,000 unsatisfactory dwellings and 660 homeless households. They are boring statistics, but statistics of misery, dejection, and hopelessness. The Government have a major responsibility to try to do something about them rather than sit on their hands. The Government will not even allow Newham and other boroughs to spend their own money.
We should also consider the impact of the regulations on unemployment. Through their housing cuts, the Government are close to destroying the construction industry and home building. In London alone the number of unemployed construction workers increased from 17,000 in 1979, when this benighted Government took over, to 40,000 in 1982, when they ceased to collect the figures. It is not surprising that they ceased to collect the figures, because they are an appalling indictment of their record.
Housing investment is good at creating jobs because it is labour intensive. Moreover, those jobs go straight through to the private sector. It does not seem to have dawned on the Government that, of every £100 spent on construction, about £87 goes straight through to jobs in the private sector. The Conservative party's friends in private business are being driven to the wall by the Government's economic policies. How many jobs in the construction industry will be lost by the reduction of spending of capital receipts? I have heard 65,000 bandied around. Is that correct? I believe that the Government have a balance sheet and they should know the likely impact of the regulations on employment.
The regulations will lead to fewer homes, fewer jobs and less investment. Nobody can argue the contrary. The Government's proposal is therefore socially unjust and economically blind, and it should be rejected.
9.33 pm
Mr. Roger Freeman: Like my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), I voted for the public expenditure White Paper. I am sure that he also is worried about the news, which has been reported in the newspapers today, that local authority
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capital expenditure—principally on housing—is likely to be £1 billion in excess of the original estimate for 1984–85. If that is true, it is up by £300 million since my right hon. and learned Friend the Chief Secretary gave evidence to the Treasury Select Committee three weeks ago. That is surely evidence that the Government find it extremely difficult to estimate the level of local authority capital expenditure, and the reason is simply the method of control.
The committee which my right hon. Friend set up to look into the system of controlling local authority capital expenditure will have the best chance of affecting the total outturn in the fiscal year 1986–87. There are four reforms which I know my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) will join me in commending to the Government. I put them forward in a constructive spirit because they are designed to improve the system of controlling local authority capital expenditure.
The hon. Member for St. Helens, South (Mr. Bermingham) somewhat disparagingly referred to the Treasury and Civil Service Committee's recommendation on the treatment of asset sales as mere accounting methodology. However, I believe that it is important to treat local authority house sales and the proceeds of privatisation as a means of financing the PSBR, not because of a slavish belief in the purity of national accounting but because I am concerned about the future. Five or 10 years hence, the rate of sale of local authority houses will inevitably begin to fall because we shall run out of houses to sell. I am concerned about the effect on the planning total for local authority capital expenditure.
If receipts are regarded as a means of financing the PSBR, and if we merely look at gross capital expenditure consistently over the next decade, we shall be able fairly to allocate our national resources much more sensibly than we do under the present system, which takes into account only the net figure — that of gross expenditure less current capital receipts.
The second reform is an attempt to redress the problem to which I alluded at the outset. The Government find it difficult to forecast the outturn of local authority capital expenditure for the year because the system of control is the housing investment programme allocation plus a proportion of past and current receipts. Therefore, it is a guesstimate.
Last summer, my right hon. Friend was forced to announce a voluntary moratorium—I am sure that it was the last thing he wanted to do—because the outturn was likely to be much greater than assumed in the public expenditure White Paper. The only way to solve that problem is to have precise gross capital expenditure allocations for each local authority. That would be much fairer to the two authorities in my area — Kettering borough and Daventry district.
If central Government, in consultation with the local authorities, were to set precise amounts of allocation for each local authority, that would alleviate the great injustice done to those councils which have been successful in selling council houses. Such authorities have suffered under my right hon. Friend's proposals, even though they were inevitable, following the logic of the public expenditure White Paper for which the House voted. As a result, the authorities which have suffered the largest falls in their capital budgets for next year are those which have been successful in selling council houses.

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I admit that such a system would be difficult to introduce and would require time, but it would be fairer to authorities such as the two in my constituency which have been successful in selling council houses. They would have the chance to argue with my right hon. Friend the Secretary of State for a much less sharp fall in their capital budget than the 40 per cent. to 50 per cent. that they face next year. Moreover, if there were a specific capital budget allocation for each authority my right hon. Friend the Secretary of State would not be forced into stops and starts and voluntary and even compulsory moratoria during the year, because he could be certain at the outset and would hold each authority to the exact amount allocated.
My third suggestion concerns an incentive scheme. If for national accounting purposes we treat as negative expenditure 100 per cent. of receipts, from council house sales in any given year—my right hon. Friend proposed this when the system was introduced and we must be consistent—and if there was a specific allocation of estimated receipts, my right hon. Friend could allow authorities which exceed the estimated receipts to keep and spend all the additional receipts without that having any effect on the PSBR. That would provide a modest incentive for councils to sell council houses, which the present system of allowing only 20 per cent. of current receipts to be spent does not really provide.
Finally, although many authorities accept the logic of the proposals and the need for them, they are worried because once again there is uncertainty as well as a sharp reduction in capital budgets. Many believe that far greater certainty is needed for capital expenditure. If central Government can plan ahead for three years, as the public expenditure White Paper does, surely local authorities can be given some certainty over a three-year cycle as to the amount that they will be allowed to spend.
I support my right hon. Friend's action in reducing the prescribed proportions, because I believe that it is inevitable and because I support the public expenditure White Paper, but I hope that his committee will bring greater sanity to the system of setting public expenditure capital budgets for local authorities.
9.43 pm
Mr. Jeremy Corbyn: This is a very serious debate on a very serious issue. I should say at the outset that I am one of those who strongly believe that the sale of council houses by local authorities, especially those facing severe housing problems, does nothing whatever to assist the solution of long-term housing problems. It is very short-sighted of the Government to insist on the sale of council houses when they know perfectly well that those sold will be those on cottage estates, street properties, nice acquired properties and rehabilitated properties, and then to blame the authority because it cannot transfer families with children from tower blocks to street level accommodation. There is something altogether wrong with the way in which the Government seek to impose that policy on local authorities.
Because I represent an area of enormous housing deprivation and see daily the problems thereby created, I believe that the council has been told that it must hurry up the sale of council houses. It has then been told that it cannot use to the maximum the capital receipts from those sales to meet the problems of those on the housing waiting lists. The council could not even run to stand still on the existing housing allocations and capital receipts; now it is
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being further handicapped. My borough's housing problems can only worsen because of the Government's decision in allocating HIP money and using capital receipts.
This debate is serious because of the terrible housing problems facing people in London and other major cities, as other hon. Members have explained. Overall housing expenditure in London has decreased from the 1978–79 figure of £1·32 billion to £609 million in 1983–84. That is a constant decline brought about not because the people of London are better housed or are in less need of good housing but simply because Government policy insists that that should be so.
The make-up of new building starts and housing allocation in London as a whole is even more serious. For example, in 1975 there were 21,441 new building starts by local authorities and 4,790 new building starts in the private sector. The total numbers of starts, including other public sector starts, was 29,410. By 1979, the total was somewhat lower than 15,000 new building starts, but by 1984 there were 2,300 local authority, 3,430 public sector and 6,220 private sector new building starts in London — a total of 9,650. That makes London the worst housed city in Britain and possibly one of the worst in Europe.
We should examine other grim statistics. In 1984, a horrifying 2,090 people were in bed and breakfast accommodation and 3,470 people were in other temporary accommodation. [Interruption.] Conservative Members might find this amusing, but they are the ones who are on the payroll vote. They will go through the Division Lobby to hit further the homeless and the poorest in the inner London areas.
Mr. Robert Atkins: Tell us about the wealthy Mrs. Hodge.
Mr. Corbyn: The hon. Gentleman, who always addresses the House from a sedentary position, should remember the days when he was on Haringey council, when he continually opposed expanding the housing programme and neglected the people on the housing waiting list.
Mr. Atkins rose—
Mr. Corbyn: The hon. Gentleman can stand!
Mr. Atkins: I was intervening from a sedentary position to remind the hon. Gentleman that he comes from a council the leader of which lives in a large and expensive house in Canonbury. She has a nanny who looks after her children. Can the hon. Gentleman honestly tell the House that such a council in Islington with such a leader is anything less than hypocritical in its attitude towards housing the poor?
Mr. Corbyn: The word "hypocritical" comes easily to the hon. Gentleman's lips. If the hon. Gentleman can only make a personalised attack on one member of the council who personally has done more to achieve a high level of public sector housing in Islington than anyone else, he shows the disgraceful attitude of the Conservative party towards the poorest people in the inner city. This is a serious issue, and if the hon. Gentleman has nothing serious to say I suggest that he should not bother to intervene further.
I ask Government Members to consider what they are doing not just to London as whole but to the borough that

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I represent. Some months ago, the borough council made a reasonable bid for a £81 million housing investment allocation which could help towards rehabilitating existing council properties, beginning a new building programme and getting us away from the dangerous position when so many families were threatened daily with having to go into bed and breakfast accommodation because they had nowhere else to go. Instead, the council was offered rather less than half the figure it wanted.
The Government treat local authority bids in a way that almost leads us to believe that local authorities make them up when they put them in. I should like to quote from a report by the chair of Islington Housing Committee, Councillor Chris Calnan to the tenants liaison committee on 14 February:
"The Council's bid is not an arbitrary figure—it is based on technical and statistical advice as to all the repairs and improvements required to the Council's stock and on the demand there is for public housing for people in need. This is then translated into a costed total and becomes the Council's bid. Unfortunately, whilst the Council's officers do put much time and effort into working up the bid, the DOE operate a set of needs criteria which produce results far removed from our needs. Therefore, as previous experience has shown, the allocation we receive tends to bear little relation to the bid we submit."
The allocation is £29·3 million against the submitted bid of £81 million.
Further to that, if the regulations go through tonight, the council will lose a further £3·48 million from its capital receipts. On top of the disgraceful attack on our capital housing programme we are to lose a further £3·48 million. That can only serve to harm the people of Islington in housing need still further.
Islington's housing problems are serious. Anyone who lives in an inner city area and any Member of Parliament or councillor who holds a weekly surgery must be aware of the frightening misery in which many people live. People who bring up their families in one-bedroomed flats cannot transfer out of them, and they cannot transfer from high-rise developments. Some people cannot even obtain any form of council flat. Around them they see dereliction created by the Government's policy of refusing sufficient money to rehabilitate existing properties.
We have the ludicrous position of many unemployed building workers all over London and in other major cities walking past the dereliction, often living in substandard housing or on jerry-built estates which now need major repairs, signing on at employment exchanges or claiming DHSS benefits when they are willing, able and ready to build the houses needed for themselves and the people of those areas.
All that Conservative Members can do is make jokes about councillors and councils. They should be ashamed of themselves and of their attitude towards the country's badly housed people.
Misery and desperation exists on housing estates where people have been promised improvements and where they have worked for years to reach agreement with the council on how rehabilitation work can be done and how badly designed and built estates can be made slightly more habitable. They now know that due to Government policy many of those improvements and repairs will not take place and that they will be confined to further years of misery.
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I spent the whole of last Sunday morning talking to tenants on the Mayville estate in Islington. If the Minister wishes to find out about housing problems, he should go to that or any other estate in my constituency and we should be glad to show him what it is like there and the problems that people face. All those people could see the improvements that the council was doing to some of the blocks and they asked whether they would happen to their blocks or whether they would be stopped by the Government. They know what kind of Government we have and what kind of a man the Secretary of State is. He continually cuts the HIP and the council's use of its capital receipts.
There is misery in the inner cities and throughout the country. Housing is the greatest problem and misery. It is the greatest retardant of children's development and the biggest divider of communities, yet we have a Government who are now cutting capital programmes and who will not even allow local authorities to use their own capital receipts to develop and improve their housing stock. Once more there is a fundamental issue of local government democracy and of the denial of the wishes of local people. The Government seem to have a blinding desire to destroy any vestige of local democracy when it has been seen to try to provide for the needs of the people who elect local councillors. We have been faced with rate capping, the abolition of the GLC, the cancellation of elections, cuts in the housing investment programme, and now with the control of capital receipts. It is a final insult to tell local authorities, which are opposed to the sale of council houses because of the misery that it brings, that they cannot even use the receipts from that to do something for the poor people who are stuck in bed and breakfast hotels, halfway house, and temporary accommodation.
There is terrible misery. The social cost that we shall reap will be terrifying. It is ludicrous to cut public spending. Now is the time to offset the shortage of housing and homelessness against the problem of unemployment among building workers. Put together, they would solve each other's problems, and from that, we could build a better society.
9.55 pm
Mr. Roger Gale: Those who have spent the past four hours in the Chamber have heard a rhetoric of misery from Opposition Members. It is worth placing on the record the fact that the catalogue of civic housing disasters outlined by the hon. Members for Newham, North-West (Mr. Banks) and for Islington, North (Mr. Corbyn) may in part be due to the long periods of Socialist control to which those authorities were subjected.
Mr. Corbyn: Will the hon. Gentleman give way?
Mr. Gale: No, Sir.
Ten days ago, in a similar debate, I placed on record my belief that these proposals were likely to offer a disincentive to future sale and, therefore, to the generation of new money. I stated then, and I repeat tonight, that the proposals are likely to prove counter-productive. I commend to my right hon. and hon. Friends the proposals of my right hon. Friend the Member for Kettering (Mr. Freeman) which, as some of us have said, would go part of the way towards alleviating that disincentive.
I also place on record my understanding of the need to control public sector borrowing. I listened to the

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courageous speech of my hon. Friend the Member for Bury, South (Mr. Sumberg), but his economic argument is as unsatisfactory as that of my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). If one wishes to sell an old car and to buy a boat, no one will stop one from doing so. However, if one also happens to be overdrawn at the bank without an arrangement when one sells the car, the bank manager is likely to say, "Before you buy the boat, where is my money?" It is all very well having money in one account, but if one is overdrawn in another—as the country is—it is right for people—in this case the Government—to object.
Mr. Simon Hughes rose—
Mr. Gale: I sought to raise earlier a matter which causes me greater anxiety. I hope that clarification of it will enable me to support the Government tonight. I understood my right hon. Friend to suggest that it was likely that sheltered housing could be accommodated under concessions made by my hon. Friend the Minister 10 days ago. Many elderly people, especially those in seaside towns, live in under-occupied public sector housing and wait on transfer lists for accommodation in sheltered housing. It is right and desirable to rehouse them in the type of accommodation that they require. The public sector housing that they vacate should be made available for sale and full occupation.
In both my local authority areas — Thanet and Canterbury district council areas — about 150 to 200 elderly people fall into that category. In Thanet district council area, there is a parcel of land which is ideally suited for sheltered housing.
I hope that my right hon. Friend the Secretary of State for Wales can answer this point. If a local authority chooses to build sheltered housing on its own land for sale to a housing association, which in turn will let that property, will that qualify under the concession announced last week? The explanatory note on the regulations states:
"No proportion is prescribed in respect of dwellings built or acquired for sale or built under licence for sale."
Therefore, it seems entirely reasonable that a local authority should use 100 per cent. of its receipts to build for sale to a housing association to release unoccupied public sector housing for sale and full occupation.
That is the only point that I wished to make. I hope that my right hon. Friend can confirm that I am right in my belief and thereby enable me to support the Government.
10 pm
Mr. Allen McKay: This is probably one of the most nonsensical proposals for local government that we have had to discuss. For a long time the Government have done their best to clobber local government with rate capping, the abolition of metropolitan county councils and the proposal to stop local authorities from using money that is rightfully theirs. Since 1981–82, when the new capital control system was introduced, the prescribed proportion has gradually been reduced in such a way that local authorities can no longer plan for the future. Perhaps next year they will be left with nothing.
I hope that the Secretary of State will address this point and say what is likely to happen next year. Will we retain the status quo as it will be after the regulations are passed? Despite people such as the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), who is well known for
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his opposition to the Government's policies on local government, I fear that we shall not have enough support to stop the regulations from going through. Will we have the status quo next year, or will local authorities be left with nothing? The Secretary of State must give some sign of what will happen, because local authorities cannot plan capital expenditure if the Government continue to change their mind every five minutes.
It is nonsense to suggest that the spending of money which the Government encouraged local authorities to generate can affect the PSBR. Local authorities build capital programmes on their view of future needs, and then inject into them the possibility of using the capital receipts which the Government asked them to obtain. It takes a long time to build such programmes.
The regulations will affect the creation of jobs. It is estimated that £560 million would create 65,000 jobs. If the Government were really worried about unemployment, they could create jobs in the public sector industries. Central Government have failed miserably in the creation of jobs and have abdicated their responsibility for doing so to local government. But in abdicating responsibility, they have also cut the feet from under local authorities by removing money that is rightfully theirs.
The money involved in the proposed change is about £920 million; that will be the amount removed from the local authorities, which they could otherwise have used to regenerate the economies of their areas. For the second time since I have been a Member of Parliament, the local authority organisations — the Association of District Councils, the Association of Metropolitan Authorities and the Association of District Authorities — have come together, irrespective of political affinities, and denounced the Government's action.
Let me turn to some om the problems that the Association of District Councils says will arise in Amber valley, Blackpool, Charnwood, Cheltenham and Derby. These are not Labour-controlled authorities. They are controlled by the Conservatives. They are worried about the reduction in the amount of money that they will be able to spend. Hastings, Hertsmere, Ipswich, Kingston-upon-Hull, Preston, Redditch and Shepway are all concerned about the amount of money that is to be taken from them by central Government.
The housing investment programme allocation in Barnsley has been reduced to 82·2 per cent. of last year's allocation. That represents a severe cut in the amount of money that Barnsley will be able to spend. The proposed reduction in capital receipts means that the Government are reducing local expenditure by about £3·85 million. However, the vast majority of the funds to be made available are already committed to plans that have already been made. This is how local authorities work. Central Government seem to forget that local authorities have to plan their expenditure. Therefore, the result is already catastrophic.
Housing advances in 1985–86 will be severely restricted, to about £100,000. Virtually no loans will be made to housing associations. The Secretary of State referred to the Airey houses and to a relaxation in the provisions of the Housing Defects Act 1984. However, that Act relates only to owner-occupiers. Will the Secretary of State say something about the Airey houses that belong to local authorities? The decision has been taken in Barnsley, because of the condition of the Airey houses, to pull them all down. The capital receipts

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allocation was going to be used to replace the houses that had to be pulled down. What is to happen about those houses?
Furthermore, what will be the position of owner-occupiers who depend upon grants to restore their homes? The Secretary of State said last year that if these houses could attract a mortgage, local authorities would be able to lend money for this purpose. However, these owner-occupiers have found that building societies will not lend money on them. Grants are not available, so what is to happen about those houses which are to be pulled down by the local authority and what is to happen to those who are waiting for money from the local authority to repair their homes? Only very small mandatory grants will be made available for renovation, and no discretionary grants will be made available. The grants for the insulation of houses will be at the prescribed limit.
Will the Secretary of State also deal with the condensation problems that face every local authority? There are severe condensation problems in Barnsley. The local authority depends upon capital receipts to overcome those problems. No municipalisation will take place this year. In Barnsley there are many old private houses which the landlords do not want. They would willingly get rid of them and allow the local authority to take over the responsibility for repairs, but the local authority will be unable to do so because it depends upon capital receipts.
The greatest effect of the change in the allocation will be on the pre-war housing stock, because all improvement grants are to be stopped. All new building is to come to a stop. The sheltered housing schemes have also come to an end. The local authority has had to cut its slum clearance programme to 25 houses. Because of the rate of slum clearance dictated by the Government's policy, houses in Barnsley will have a life of 3,200 years simply because Barnsley cannot carry out slum clearance.
The effect on local government will be catastrophic, unless the Government allow local authorities to spend the money that is rightfully theirs. The Secretary of State brought representatives of the local authority down to London and slapped their wrists because they would not sell council houses. The Government gave them to understand that if they did sell council houses they could spend money upon putting right these defects. The Secretary of State has reneged on that promise. He has left Barnsley in a difficult position. The results will last for generations.
10.10 pm
Mr. Anthony Steen: You said, Mr. Speaker, that the shorter the speech, the more accurate and disciplined the mind; and at this later stage, knowing that the Front Benches would like to make their contributions, I shall be brief.
Two principles are involved in this proposal. The first is whether the Government should intervene in local government affairs, and the second is: if so, to what extent? Regrettably, Governments have always intervened in local government affairs. Unfortunately, the Conservative Government are interfering with local government more than we should do.
It is an increasing practice that there should be more centralised control of local government expenditure. Once we have embarked on this course of action it is difficult
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for us to go back. If my hon. Friends wish to support the Government's economic policy, but are reluctant about this proposal, we still have an obligation to go in behind the Secretary of State and support him in the vote. Having said that, it is only right that I should air my grave reservations about the concept of more central control and central Government intervention in local government affairs.
To what extent will local government lose its initiative to sell its assets as a result of Government interference? Much of tonight's debate has been about the sale of council houses, and I should like to introduce another aspect which, although it has not been mentioned, is as important, if not more so, than some of the matters that have been raised tonight.
As my right hon. Friend the Secretary of State will know, I have waged a campaign in the House for the best part of 10 years on the sale of vacant, derelict and dormant land in the ownership of local councils. It is wrong that there should be tens of thousands of acres of wasting assets in public ownership. I know that my right hon. Friend the Secretary of State supports me in my campaign and agrees that the public sector should not hoard land which is vacant and dormant and which should be sold.
In 1971 the Secretary of State set up the land registers in the Department of the Environment. Since then, every six months, about 20 full-time staff update the register. It is particularly interesting that every six months the figure increases. In July 1982 there were 95,000 acres on the land register in public ownership which were vacant, dormant or derelict. In January 1983 the figure was 107,000, in July 1983 it had increased to 110,000, and in January 1984 it had increased to 112,000, and so it goes up.
Not all of this land is in local authority ownership. Some of it is owned by the water authorities, as my right hon. Friend knows, some by health authorities and some by the Coal Board. Some of it is owned by Government Departments—the Ministry of Defence, the Department of the Environment, the Department of Health and Social Security. I fear that the trend will not be reversed by this regulation and that if it bites it will make local authorities even more reluctant to sell the land that they are hoarding, and they will have even less incentive to do so. Far from allowing them the 50 per cent. which they now get, they will get only 30 per cent. of money so raised, and this is no way to encourage local authorities to sell a wasting asset.
I had hoped to be able to tell the House that because of the Government's initiatives the amount of dormant, derelict and vacant land in the country in local authority ownership had decreased dramatically since they introduced the registers. In fact, what I have told the House indicates that it has continued to increase. I am pleased to say that the Parliamentary Under-Secretary on 21 January indicated that he had made four directions to compel local government to sell wasting, vacant, dormant land. The House will be disappointed to learn that the amount that he has directed local authorities to sell is precisely 32 acres. Therefore, there remain some 12,100 acres on the register, and an order for 32 acres to be sold.
What concerns me is that the regulations will be an even greater disincentive to local authorities to sell wasting assets. When my right hon. Friend the Secretary of State for Wales winds up the debate perhaps he can tell the House why I am wrong and why he believes that these

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regulations will encourage particularly the large metropolitan districts and large urban areas to get rid of their wasting assets.
10.16 pm
Mr. Barry Jones: The debate has been a thoughtful and concerned one. Hon. Members of all parties have spoken with deep concern about the likely injurious impact of the regulations.
Hanging like a pall over the debate and over the housing service is the Secretary of State's remark concerning the overall judgment of the proper level of expenditure that Britain can afford which I think is the language of public expenditure cuts.
My hon. Friend the Member for Copeland (Dr. Cunningham) outlined comprehensively the Opposition's case. My hon. Friends the Members for Islington, South and Finsbury (Mr. Smith), for Sheffield, Heeley (Mr. Michie), for St. Helens, South (Mr. Bermingham), for Newham, North-West (Mr. Banks), for Islington, North (Mr. Corbyn), and for Barnsley, West and Penistone (Mr. McKay) made committed speeches, and they, like me are concerned about the slow progress in tackling urgent housing problems.
The hon. Member for Bristol, North-West (Mr. Stern) supported the Government, and his was quite a rare speech. He supported the need to rein back spending of capital receipts. I noted, however, that he addressed the House with the aid of notes on postcards. The first postcard was a franked one, and his speech in effect showed scant real belief in the need to rein back public expenditure. I could interpret his speech as an attack on the public sector borrowing requirement.
Mr. Stern: The hon. Gentleman may not be aware that the cost of postage applies only when the franked postcard is used.
Mr. Jones: I think that it was a waste of House of Commons stationery and as an accountant the hon. Gentleman should have known better.
The hon. Member for South Hams (Mr. Steen) said that the Government are increasingly interfering in local government.
The hon. Member for Rutland and Mellon (Mr. Latham) made a speech which indicated great insight into the building industry. His was a devastating critique of Treasury accounting procedures. He predicted the seizing up of the ministerial car, as it were. He said that the Government's ministerial car, that is, the Government's engine, had poor clutch control. His was the best metaphor of the debate, and he indicated that the Government had a moral duty to the homeless. He said that the builders were dissatisfied with the Government. He predicted the bankruptcy of many builders.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) made a detailed criticism of the regulations and quoted eminent churchmen to aid his case.
The hon. Member for Bury, South (Mr. Sumberg) indicated that he would not support the Government. He, too, made a courageous speech. He said that he feared the impact of the loss of £600,000 of capital receipts in the town that he represents. He was worried about the effects of a 17 per cent. unemployment rate on his constituents. He said that the Secretary of State was a victim of Treasury policy.
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The hon. Member for Tiverton (Mr. Maxwell-Hyslop), another Conservative, scourged Ministers and called for a better Government. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), yet another Conservative, spoke up clearly for those living in rotten housing. The hon. Member for Kettering (Mr. Freeman), also a Conservative, expressed concern for the fall in the budget of his housing authorities.
The Association of Metropolitan Authorities in England estimates that housing authorities face a £19 billion housing repair bill. The Association of Chief Housing Officers in South Wales estimates that about £8 billion is needed for a 15-year programme to update and replace housing. The Building Employers Confederation says that 20 per cent. of all housing is in need of basic repair or improvement.
A top level inquiry headed by a member of the royal family, the report of which was published in January, says that Britain faces a serious housing crisis, with the poor suffering most of all. There is evidence, the report says, of a decline in the condition of older housing and some of the newer stock, mostly in the public sector.
It is certain that in England and Wales there is a housing crisis. The debate has told us that, and hon. Members in all parts of the House are witnesses to it. Millions of our fellow citizens are living in frustrating or degrading conditions. Tens of thousands of building workers will lose their jobs because of the regulations. The Building Employers Confederation puts the figure at 150,000 The Association of Welsh District Councils says that more jobs will be lost. Despite that, billions of pounds belonging to local authorities in England and Wales stand ready to be used to tackle the housing crisis.
In the matter of fact, offhand tones of cool city accountancy, Ministers effectively tell the House that they intend further to restrict the already unsatisfactory attack on our housing problems. That happened today. Bad housing is a festering and growing wound in British society. It enhances our social divisions, it divides the north from the south, it is unjust and it is unforgivable at a time when Britain spends £17 billion on funding a dole queue of 4 million people yet holds untold wealth from the North sea.
Do Ministers really comprehend the human consequences of the regulations? I will describe briefly some of them as they exist in Wales. Aneurin Davies does not have a bathroom. His home is also without an inside toilet. His one sink does not have a proper waste pipe. A few doors away from Mr. Davies' Cardiff road, Aberavon, home, 64-year-old Jack James bathes in a galvanised bath in the living room. His toilet is one of a mini terrace of outside loos. In Abertillery, a pensioner was moved from his house because it had no electricity or lighting. For them and thousands like them, that is home in Wales today.
Housing officials and hon. Members far too often interview sobbing old ladies who suffer interminable delays in plans to stop up leaking roofs. Officials calculate that some elderly pople will die before their homes are made draught and waterproof. In Wales, more than 40 per cent. of our housing stock was built before 1919, compared with 29 per cent. in Britain as a whole. Clearly, those houses are in urgent need of repair. The problems with the Welsh housing stock can best be appreciated by a close examination of one particularly hard hit area. My hon. Friend the Member for Cynon Valley (Mrs. Clwyd), in a compassionate and informed speech, referred to the

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problems faced by the Cynon Valley authority. The alarming figures which my hon. Friend quoted showed how out of touch Welsh Office Ministers have become in their assessment of the housing problems of Wales. It is insensitive to propose the implementation of the regulations in Wales. Government statistics are woefully inadequate to identify the real housing needs on the Principality. It is reasonable to assume that the Cynon Valley survey conclusions will be repeated elsewhere.
The regulations will hit the Welsh people hard. While the English proportion of receipts that can be spent is to be 20 per cent., Wales must suffer a proportion of 15 per cent. The previous proportions were equally wrong. England had 40 per cent. and Wales was down to 25 per cent. Are the proportions fixed at those levels because we trounce the English public schoolboys at Cardiff Arms Park? I hope that even at this late stage Ministers will be prepared to think again about the figures for Wales.
Mr. Simon Hughes: That last point is important, because it disproves the Government's economic argument that they wish to reduce the public sector borrowing requirement. If that was the case, they would have the same limit in Scotland, Wales and England. Because they do not, that makes it plain that there must be other reasons for their policy which they have not disclosed.
Mr. Jones: We are glad to have the full support of the sole member of the Alliance who is here this evening. I am grateful for his intervention.
In Wales the capital expenditure of districts on housing is being reduced in real terms by £80 million over two years.
There is a need for more jobs in Wales. Coupled with that is the need to tackle the very serious housing crisis. The House may know that one in five of our men are jobless. Of the 183,000 who are unemployed in Wales at least 18,000 come from the building industry. There are perhaps some 4,000 skilled building workers now jobless and 14,000 unskilled operatives on the dole. It is incredible that with the housing problems our nation faces the Government pay these workers £90 million each year in Wales to languish idle in the dole queues. That must be social and economic nonsense. A properly planned public building and renovation programme within Wales would cut our unemployment totals at a stroke. It would also be the proper, positive response to the calls from local housing authorities and the allied agencies for Government action.
The regulations are a kick in the teeth to people who are entitled to better housing conditions. In many ways, they are the most scandalous of cuts. There is already much underprivilege in Wales. The housing stock is old. Wales suffers a higher than average incidence of houses without basic amenities. House building and house repairs generate jobs. The cuts in expenditure create human misery for those who hope for a decent house and a decent family life. These cuts also foster the likelihood that jobless building workers will remain in the dole queue. The Government remain deaf to the clamour of a growing consensus across party lines that to expand housing provision would be acting in accordance with the principle of social justice. The degradation of housing in Britain is unforgivable, and the Government must carry blame for
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that. Their record is disgraceful. With the crucial exception of London, these cuts fall upon the most vulnerable of our people who live in the northern part of the British Isles. To deny the Welsh people both work and the right to warm, modern, decent housing borders on the criminal.
If these Ministers cannot do better, they should get out.
10.30 pm
The Secretary of State for Wales (Mr. Nicholas Edwards): The hon. Member for Alyn and Deeside (Mr. Jones) spoke of two people—Aneurin Davies and Jack Jones. If they are in houses without basic amenities today, they must almost certainly have been in houses without basic amenities while the hon. Gentleman was an Under-Secretary of State for Wales. During his five years in the Welsh Office, the Labour Government spent £60 million on housing improvement in Wales. This Government spent £230 million on housing improvement over three years. I am entitled at least to tell the hon. Gentleman that I am not complacent about the housing conditions in Wales, but have done a great deal more about the problem than he did when he had responsibility.
Since the first of this series of debates on local authority capital expenditure, events in the financial markets and the imminence of the Budget have given it even greater significance. During the unemployment debate on Monday, a number of hon. Members, including some of my right hon. and hon. Friends, referred to the damaging effects of a 14 per cent. interest rate. My right hon. Friend the Member for Guildford (Mr. Howell) said he would like to see a lower tax burden, improved youth training schemes and a selection of the other measures that he favours. My right hon. Friend the Chancellor of the Exchequer made it clear that he also wants to see interest rates come down and a lowering of the tax burden. The building societies have already said that mortgage rates will have to rise if we cannot get interest rates down. All that is relevant to this debate because the Government's spending plans voted for by the House on 6 December 1984 will be crucial when my right hon. Friend presents his Budget.
The Treasury Select Committee, a number of my right hon. and hon. Friends and numerous commentators have emphasised the importance of providing credible spending estimates and targets that can be realised. My hon. Friend the Member for Bristol, North-West (Mr. Stern) was one of those who emphasised the crucial importance of control on local authority spending when it represents £33 billion out of a planning total of £132 billion, and when gross capital expenditure is over £5 billion.
The commentators are surely correct in saying that, having decided on expenditure totals, we should seek to ensure that they are delivered. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) took a more casual view. He said that the odd £1 billion here or there really did not matter. Indeed, he said that £15 billion should be spent. I think it unlikely that in his profession of investment analyst he takes quite as casual a view of balance sheets as he presented this evening.
Mr. Beaumont-Dark: As usual, what my right hon. Friend says is misguided and wrong. What is casual about reminding the Government of the promise that they made to councils, when they sold their council houses, that they would be able to use their balances? There is nothing worse than being casual about broken promises.
Mr. Edwards: We also gave clear and specific undertakings about our economic policy and our spending plans, and the House of Commons voted for our public expenditure plans. It is a little surprising that my hon. Friend seems to ally himself with the happy and careless proposition of the hon. Member for Southwark and Bermondsey (Mr. Hughes) that the economy should be need-based rather than finance-based. No one can run his financial affairs on that basis, and neither can the nation.
My hon. Friend was sceptical about how much it would matter to people in other parts of the world if we spent another £1 billion or £5 billion, or indeed £15 billion. I refer him to one of the comments about the situation that I have read in the past week or two. The name of Mr. Bernard Donoghue will be known to many Opposition Members because he was an adviser at No. 10 Downing street during the period of the last Labour Government. He is now a consultant to a prominent firm of City stockbrokers. Earlier this month, he put his name to a circular that, under the heading
"Mr. Lawson must reassure financial markets",
stated:
"Now the financial markets expect him to reassure them on March 19th with tight monetary guidelines based on convincingly conservative assumptions and with few fiscal risks."
He then talked about the importance of meeting PSBR targets.
I accept that many right hon. and hon. Members may not agree with Mr. Donoghue's view, but plenty of people in the financial markets will take that view, and the decisions that we take on the matter will affect the market.
My hon. Friend the Member for Bury, South (Mr. Sumberg) praised our right-to-buy legislation.
Mr. Jack Straw: As, like the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), the right hon. Gentleman is well known as a financial expert and merchant banker, can he explain something to me? Six years ago the Government said that as the PSBR was reduced—and it has been halved in real terms— interest rates would fall. What has gone wrong?
Mr. Edwards: Even the hon. Gentleman should be willing to take some account of the pressure of the United States dollar on interest rates and the fact that at all times we have to operate in world markets in which vast sums of money are moving about.
My hon. Friend the Member for Bury, South was quite right to say that it was ludicrous for the Opposition to take credit for the receipts arising from legislation that they bitterly opposed throughout. Without those sales, we would not have been able to include the receipts in our housing allocations, and the amount that we could spend on housing would have been less. I fully understand my hon. Friends' anxiety to have a better system of control, which gives greater certainty and enables local authorities to plan their capital programmes better. I noted carefully the suggestions of my hon. Friend the Member for Kettering (Mr. Freeman), supported by my hon. Friend the Member for Thanet, North (Mr. Gale). We have already tried to meet some of the anxieties that they have expressed, and we have made arrangements to cover their point about low-cost home ownership.
Mr. Michael Foot: As the right hon. Gentleman says that he has studied these constructive
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proposals carefully, would he care to tell us the Government's view of the proposals in today's newspapers of the right hon. Member for Old Bexley and Sidcup (Mr. Heath) for a big expansion of housing and investment, which we back fully?
Mr. Edwards: Unlike the right hon. Gentleman, who was not in the House to hear the proposals of my hon. Friend the Member for Kettering, I do not intend to comment on proposals that I have not seen or read. I intend to reply to my hon. Friends who have taken part in the debate.
Several hon. Members have referred to repairs to defective houses under the Housing Defects Act 1984. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was a little unfair to my right hon. Friend the Secretary of State for the Environment. Of course Ministers considered the problems of defective houses. In Wales, I was able to meet the bids for an allocation for expenditure on privately and publicly owned prefabricated reinforced concrete dwellings and to undertake that those bids will be met in full. In England, a new indicator was introduced into the index used in the allocation process. Discussions have revealed that some local authorities face serious problems which have not been covered adequately by that index. That is why my right hon. Friend undertook earlier today to consider sympathetically requests from local authorities which might not otherwise meet their obligations under the Housing Defects Act. I must ask my hon. Friend to accept that our right hon. Friend means what he said, and that he will translate it into reality for authorities such as my hon. Friend represents.
Among the measures that we have introduced to help meet the problems is the improved forward indicators. The hon. Member for Barnsley, West and Penistone (Mr. McKay) asked for assurances about the future. We have introduced those forward indicators to provide assurances about the future. A good deal of additional flexibility is provided by the ability of local authorities, under present legislation, to refinance their mortgage books. In Wales, we have encouraged local authorities to do that, and a substantial contribution has been made this year to reduce the capital overspend that would otherwise have occurred. That undoubtedly provides scope for local authorities to ease some of their problems.
My hon. Friend the Member for Thanet, North (Mr. Gale) raised a matter of great importance to his constituents. If he lets my hon. Friend the Minister for Housing and Construction have the full details of the problem faced by his local authority, they will be considered sympathetically under the exemption announced on 27 February. I hope that my hon. Friend will understand that, without the precise details, I cannot give him a more definite assurance. It may be possible to help, but we shall have to look at the details.
A number of hon. Members, even those who support stern control of public spending, have expressed secpticism about the Government's assertion that the use of accumulated receipts would prejudice our economic objectives. But almost all of them would be considerably disconcerted if there was a sudden unleasing of up to £5 billion in any one year. Indeed, my hon. Friend the Member for Kettering expressed concern about reports that the overspend might be as much as £1 billion. In fact, my right hon. Friend the Secretary of State said that the present estimate was about £750 million.

399
These receipts have not been lying idle. They have not just sustained further borrowing, although it is true that with the Welsh local authorities they were used to sustain substantial additional borrowing. That is one reason for the size of the present overhang. They have been temporarily invested or spent on other capital requirements of local authorities.
The hon. Member for Newham, North-West (Mr. Banks) asked how much had been placed in the banks. Less than £1 billion of local authority investment is on deposit with the banks, and only a proportion of that will arise from local authority sales.
It has not just been stored in cash in the banks, as the hon. Member for Southwark and Bermondsey suggested. It has been used. If a council sells a house and does not spend the money immediately, it either reduces its own borrowing or lends it to someone else. That helps to reduce the PSBR in that year. If it spends the money in a later year, it will have to retrieve it in order to finance expenditure, thus increasing the PSBR.
The Treasury and Civil Service Select Committee—my right hon. Friend the Member for Worthing (Mr. Higgins) in particular—has argued that capital receipts from council house sales should be treated as a means of financing the PSBR rather than as negative public expenditure. The present treatment has now existed under successive Governments for many years. While I suppose it can be argued that these conventions and practices should be re-examined, it surely cannot be argued that these long-established rules and practices should be changed ad hoc to deal with the problem that has arisen over accumulated local authority receipts and that such a decision should be taken on a vote on orders between the publication of the public expenditure White Paper and the Chancellor's Budget. That would be an odd way of increasing the confidence of the market in the Government's public expenditure figures and intentions, which I understand is the desire of the Treasury and Civil Service Select Committee.
The hon. Members for Copeland (Dr. Cunningham) and for Southwark and Bermondsey referred to press reports about what the Audit Commission plans to say in its next report. I understand that the report has not yet been agreed, let alone published. It would surely be surprising if it did not have critical things to say about the present arrangements, because I and the Government agree that these are unsatisfactory. That is exactly why we entered into discussions with the local authorities and others with the object of improving them. I made that point during the debate in December. I have made it perfectly clear that it is unsatisfactory to have a large underspend followed by a large overspend — as we had under the previous control system.
The Opposition have criticised my right hon. Friend the Prime Minister for encouraging local authorities to spend during a period when there was an underspend, but I well remember the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) asking local authorities to spend, spend, spend and break the bank. He did break the bank and had to call in the IMF. Of course we need to seek better ways of managing these matters. I listened carefully to the proposals of my hon. Friend the Member for Kettering.
400
I listened with a great deal of sympathy to my hon. Friend the Member for Rutland and Melton (Mr. Latham). Successive Governments under totally different control systems have faced this problem, which my hon. Friend described as poor clutch control. I would not disagree with that description. I am asr anxious as my hon. Friend to find solutions. My hon. Friend emphasised—which is more than can be said of the Opposition—the need to find a balance and to contain public expenditure. He was not simply demanding reckless expenditure without control. The use of prescribed proportions is the means that we have to control that public spending. I believe that, until we find a new system, that is the best means of avoiding the moratorium which my hon. Friend feared would come next year. If we do not take early and effective control and have a large overspend, we might have to take a decision at the worst possible moment — halfway through the year, when it would cause the greatest possible disruption to the construction industry.
Mr. Foot rose—
Mr. Edwards: A great many hon. Members have argued for more capital spending, but they have not—[HON. MEMBERS: "Give way."] I shall not give way to the right hon. Gentleman again. He has not been present during the debate. [HON. MEMBERS: "Give way."] Very well.
Mr. Foot: The right hon. Gentleman referred to the future of the construction industry. What does he think will happen to the construction industry under the proposals that he is defending? In more general terms, what will happen to unemployment in Wales during the next 12 months, considering the fact that during the past five years unemployment in Wales has more than doubled?
Mr. Edwards: I shall tell the right hon. Gentleman something about capital expenditure in Wales, especially the relationship between current expenditure and capital spending. The CBI argues for more capital spending, while at the same time arguing for cuts in current spending. That is something that the right hon. Member for Blaenau Gwent (Mr. Foot) never does. He believes that one can spend regardless. The hon. Member for Islington, South and Finsbury (Mr. Smith) pleaded for more capital spending, but his authority is one of the worst offenders when it comes to overspending. It is now a rate-capped authority.
Between 1978–79 and the present financial year, local authority expenditure has increased by about 10 per cent. more than inflation. Had local authority current expenditure in England and Wales as a whole been limited simply to the increase in inflation since 1979, we would have had probably about £2 billion of additional resources which might have been diverted towards funding capital projects in the local authority sector.
Mr. Tony Banks rose—
Mr. Edwards: I shall not give way again to the hon. Gentleman.
If proof is required—this is my answer to the right hon. Member for Blaenau Gwent—of the Government's willingness to divert resources to capital schemes whenever room for such a shift is created, it is necessary to look no further than Wales. As a result of the generally responsible and moderate spending policies of most Welsh local authorities, growth in current spending in Wales

401
since 1979 has been well below half of that in England. [Interruption.] That better performance has allowed us to release resources for capital purposes in each recent year while maintaining—[Interruption.]
Mr. Gareth Wardell: On a point of order, Mr. Deputy Speaker. Is it possible to have some order in the House? The Secretary of State is making an important statement about the Welsh economy and housing. I should be grateful if we could have some silence.
Mr. Deputy Speaker (Mr. Harold Walker): The hon. Member is right. A great deal of distracting and disorderly noise is coming from both sides of the House. I hope that hon. Members will give the Secretary of State the opportunity to make his speech.
Mr. Allan Rogers: On a point of order, Mr. Deputy Speaker. The reason why no one is listening to the Secretary of State is that he is so boring.
Mr. Edwards: I know that the hon. Gentleman is bored with the fact that in every year we have been able to allocate additional capital resources to Wales because of the modest current expenditure policies of Welsh local authorities. As a consequence, capital spending per head is nearly double that of England. That is to meet the needs of Welsh local authorities and because they have made a genuine effort to contain their current spending. Had other local authorities been willing to do the same, there would be far more scope for additional capital spending.
When in office, the previous Labour Government watched helplessly while local government increased its current expenditure in real terms year after year. They were then forced to make a desperate effort to balance the books. Between 1974 and 1979, the previous Labour Government chopped over £4·5 billion, at today's prices, off the housing capital budget—equivalent to a cut in gross spending of about 50 per cent. in England and Wales as a whole. Under the Government of which the right hon. Member for Blaenau Gwent was a prominent member, the cut in Wales alone amounted to a staggering £265 million, or 60 per cent. That record shows that capital investment on housing declined remorselessly through the five-year period involved.
Dr. Cunningham: Despite what the Secretary of State says, when will this Administration get capital expenditure back to the level which they inherited from the previous Labour Government? Why will he not be honest and admit that in every year of the previous Labour Administration capital investment was higher than in every year of this Government?
Mr. Edwards: The point that I was making was that, if we fail to control public expenditure as a whole, we shall be forced into the position into which the previous Labour Government was forced, of suddenly making massive cuts in capital expenditure and reducing it by about 50 per cent.
The hon. Members for Copeland, for Islington, South and Finsbury, for St. Helens, South (Mr. Bermingham) and for Newham, North-West talked about the condition of the housing stock and the need to spend money on it. They are in no position to criticise the Government about the condition of the housing stock because the previous Labour Government did not just produce a total reduction of about 50 per cent. in five years: they did practically nothing about the housing stock which they have cried about in today's debate.
402
At today's prices, the Government have spent about £3 billion on improving the private sector housing stock, and the estimated level of expenditure on improvement grants in 1984–85 is likely to be about £750 million in England, and £80 million in Wales. That is a good deal more than was spent on private sector improvements—
Mr. Foot rose—
Mr. Edwards: I shall not give way to the right hon. Gentleman again because he was a member of a Government who did practically nothing about the condition of the housing stock. This Government will spend more this year on private sector improvements than was spent throughout the whole four years of the Government of which the right hon. Gentleman was a member.
Mr. Foot: Will the right hon. Gentleman tell us coolly and simply how many building workers have been thrown out of jobs in Wales since he took office?
Mr. Edwards: It is interesting that the right hon. Gentleman wishes to divert me from the fact that his Government grossly neglected the housing stock, about which they have complained today. I shall repeat the facts to the House. In our peak year, we spent more than £900 million, which is 10 times the amount spent by the Labour Government when they left office. To date in Wales under this Administration, 85,000 improvement grants have been completed. In England the total is 775,000. That is a record, of which we are proud and for which we take credit.
The hon. Member for Cynon Valley (Mrs Clwyd) spoke about the conditions in her constituency. She dismissed one by one the wide range of measures introduced by the Government to improve the housing stock, and said that they were meaningless. Nevertheless, her authority has failed to use the resources and measures that we have made available. I am entitled to say to her that we have done more for the housing stock in her area than any Labour Government has ever done.
In my opening remarks—
Mr. Steen: Before my right hon. Friend concludes, will he deal with the question of vacant public land, and the lack of incentive which the regulations may give to authorities?
Mr. Edwards: I entirely agree with my hon. Friend about the desirability of releasing vacant land. There is still a genuine incentive to authorities to do so. Indeed, some authorities may face problems which will encourage them to release more land to have money available quickly for their priorities. The resources will then be available to them in later years when the sale of assets may not go forward at today's pace. They will have the chance to secure not only immediate objectives, but their priorities in the years ahead.
As I said in my opening remarks, the background to the debate is the uncertainties in the financial markets, the need to keep interest and mortgage rates down, and next year's Budget. To listen to some hon. Members who painted a bleak picture of investment levels, it would be easy to overlook the fact that, as The Economist pointed out this week, during the past four years,
"investments will have increased faster than in any recovery for the past 25 years."
It would also be easy to overlook the fact—
Mrs. Clwyd rose—
Mr. Edwards: I am reaching the conclusion of my speech.
Mr. Barry Jones: Will the Minister give way?
Mr. Edwards: No, I am drawing my remarks to a conclusion. The total public and private fixed investment—
Mr. Barry Jones rose—
Mr. Edwards: I will give way when I have finished this point.
It would be easy to overlook the fact that total public and private fixed investment in the economy was up by 7·5 per cent. in real terms in 1984 to about £55 billion—a record figure — and that total investment in 1985 is likely to be about £60 billion. To those who are worried about jobs and about the construction industry, I say that we should be concerned with total investment, not just with investment in one sector.
Mr. Barry Jones: Is not the background to the debate the fact that last year in Wales, the right hon. Gentleman began only 700 council houses? Why was there such a pitiful number?
Mr. Edwards: If the hon. Gentleman knew anything about it, it would be clear to him that local authorities have not regarded the building of new public housing as a priority for many years—
Mr. Barry Jones: Because the Government will not let them.
Mr. Edwards: Local authorities have decided to spend their allocations on the repair and renovation of their existing housing stock. They have not chosen — they have the freedom of choice — to spend it on new housing because they know that it is not a priority.
Mrs. Clwyd rose—
Mr. Allan Rogers rose—
Mr. Edwards: I will not give way, because I wish to draw my remarks to a conclusion. The hon. Gentleman has not been present—
Mr. Rogers rose—
Mr. Deputy Speaker: Order. The Secretary of State is clearly not giving way.
Mr. Edwards: Bearing in mind the fact that only six Labour Members were in the Chamber to hear the opening speech of their Front Bench spokesman, I do not intend to give way to those who have come late to the debate.
Mrs. Clwyd: On a point of order, Mr. Deputy Speaker. The Secretary of State clearly did not understand that I took part in the debate, although he referred to some points that I made in it. Until tonight, I had always believed in the devolution of power from the centre—
Mr. Deputy Speaker: Order. That is not a point of order.
Mr. Edwards: I have already replied to the points raised by the hon. Lady, and I do not intend to elaborate.
In 1971, the Conservative Government, which operated a different control system, said this about capital expenditure in the Green Paper on local government finance:
404
"Without central Government controls aggregate expenditure could exceed the tolerable level."
Any Government at any time must decide the tolerable level of expenditure in the management of the economy as a whole. With all the implications for interest rates and our other economic objectives we cannot allow aggregate expenditure to run out of control. Therefore, I ask my right hon. and hon. Friends to support the Government.
Queston put:—
The House divided: Ayes 192, Noes 313.

Division No. 159]

[11.8 pm

AYES

Adams, Allen (Paisley N)

Foot, Rt Hon Michael

Alton, David

Forrester, John

Anderson, Donald

Foster, Derek

Archer, Rt Hon Peter

Foulkes, George

Ashdown, Paddy

Fraser, J. (Norwood)

Ashton, Joe

Freeson, Rt Hon Reginald

Atkinson, N. (Tottenham)

Freud, Clement

Bagier, Gordon A. T.

Garrett, W. E.

Banks, Tony (Newham NW)

George, Bruce

Barnett, Guy

Gilmour, Rt Hon Sir Ian

Barron, Kevin

Godman, Dr Norman

Beaumont-Dark, Anthony

Gould, Bryan

Beckett, Mrs Margaret

Gourlay, Harry

Beith, A. J.

Hamilton, James (M'well N)

Benn, Tony

Hamilton, W. W. (Central Fife)

Bermingham, Gerald

Hargreaves, Kenneth

Bevan, David Gilroy

Harman, Ms Harriet

Bidwell, Sydney

Harrison, Rt Hon Walter

Blair, Anthony

Hart, Rt Hon Dame Judith

Boyes, Roland

Haselhurst, Alan

Bray, Dr Jeremy

Haynes, Frank

Brown, Gordon (D'f'mline E)

Heffer, Eric S.

Brown, N. (N'c'tle-u-Tyne E)

Hicks, Robert

Buchan, Norman

Hogg, N. (C'nauld & Kilsyth)

Callaghan, Jim (Heyw'd & M)

Holland, Stuart (Vauxhall)

Campbell, Ian

Home Robertson, John

Campbell-Savours, Dale

Howells, Geraint

Canavan, Dennis

Hoyle, Douglas

Carlile, Alexander (Montg'y)

Hughes, Robert (Aberdeen N)

Carter-Jones, Lewis

Hughes, Roy (Newport East)

Cartwright, John

Hughes, Sean (Knowsley S)

Clark, Dr David (S Shields)

Hughes, Simon (Southwark)

Clay, Robert

Janner, Hon Greville

Clwyd, Mrs Ann

John, Brynmor

Cocks, Rt Hon M. (Bristol S.)

Jones, Barry (Alyn & Deeside)

Cohen, Harry

Kaufman, Rt Hon Gerald

Coleman, Donald

Kennedy, Charles

Concannon, Rt Hon J. D.

Kilroy-Silk, Robert

Cook, Frank (Stockton North)

Kirkwood, Archy

Cook, Robin F. (Livingston)

Knox, David

Corbett, Robin

Lambie, David

Corbyn, Jeremy

Lamond, James

Cowans, Harry

Latham, Michael

Craigen, J. M.

Leadbitter, Ted

Crowther, Stan

Leighton, Ronald

Cunningham, Dr John

Lewis, Ron (Carlisle)

Davies, Ronald (Caerphilly)

Lewis, Terence (Worsley)

Davis, Terry (B'ham, H'ge H'l)

Litherland, Robert

Deakins, Eric

Lloyd, Tony (Stretford)

Dewar, Donald

Loyden, Edward

Dixon, Donald

McCartney, Hugh

Dobson, Frank

McDonald, Dr Oonagh

Douglas, Dick

McGuire, Michael

Dover, Den

McKelvey, William

Dubs, Alfred

Mackenzie, Rt Hon Gregor

Duffy, A. E. P.

McNamara, Kevin

Dunwoody, Hon Mrs G.

McWilliam, John

Eastham, Ken

Madden, Max

Evans, John (St. Helens N)

Madel, David

Ewing, Harry

Marek, Dr John

Faulds, Andrew

Marshall, David (Shettleston)

Field, Frank (Birkenhead)

Martin, Michael

Fields, T. (L'pool Broad Gn)

Maxton, John

Fisher, Mark

Maynard, Miss Joan

Flannery, Martin

Meadowcroft, Michael

405

Michie, William

Short, Mrs R.(W'hampt'n NE)

Millan, Rt Hon Bruce

Silkin, Rt Hon J.

Mitchell, Austin (G't Grimsby)

Sims, Roger

Morris, Rt Hon A. (W'shawe)

Skinner, Dennis

Morris, Rt Hon J. (Aberavon)

Smith, C.(Isl'ton S & F'bury)

Morrison, Hon C. (Devizes)

Smith, Rt Hon J. (M'kl'ds E)

Mudd, David

Snape, Peter

Nellist, David

Soley, Clive

Oakes, Rt Hon Gordon

Spearing, Nigel

O'Brien, William

Strang, Gavin

O'Neill, Martin

Straw, Jack

Orme, Rt Hon Stanley

Sumberg, David

Park, George

Thomas, Dafydd (Merioneth)

Parry, Robert

Thomas, Dr R. (Carmarthen)

Patchett, Terry

Thorne, Stan (Preston)

Pendry, Tom

Tinn, James

Penhaligon, David

Torney, Tom

Pike, Peter

Wainwright, R.

Radice, Giles

Wardell, Gareth (Gower)

Randall, Stuart

Wareing, Robert

Rathbone, Tim

Welsh, Michael

Redmond, M.

White, James

Rees, Rt Hon M. (Leeds S)

Wiggin, Jerry

Richardson, Ms Jo

Williams, Rt Hon A.

Roberts, Ernest (Hackney N)

Winnick, David

Robinson, G. (Coventry NW)

Winterton, Nicholas

Rogers, Allan

Woodall, Alec

Rooker, J. W.

Yeo, Tim

Rowlands, Ted

Young, David (Bolton SE)

Ryman, John

Sedgemore, Brian

Tellers for the Ayes:

Sheerman, Barry

Mr. Lawrence Cunliffe and

Sheldon, Rt Hon R.

Mr. Allen McKay.

NOES

Aitken, Jonathan

Butler, Hon Adam

Alexander, Richard

Butterfill, John

Alison, Rt Hon Michael

Carlisle, Kenneth (Lincoln)

Amery, Rt Hon Julian

Carttiss, Michael

Amess, David

Cash, William

Ancram, Michael

Chalker, Mrs Lynda

Arnold, Tom

Channon, Rt Hon Paul

Ashby, David

Chope, Christopher

Aspinwall, Jack

Churchill, W. S.

Atkins, Rt Hon Sir H.

Clark, Hon A. (Plym'th S'n)

Atkins, Robert (South Ribble)

Clark, Dr Michael (Rochford)

Atkinson, David (B'm'th E)

Clark, Sir W. (Croydon S)

Baker, Rt Hon K. (Mole Vall'y)

Clarke, Rt Hon K. (Rushcliffe)

Baker, Nicholas (N Dorset)

Clegg, Sir Walter

Batiste, Spencer

Cockeram, Eric

Bellingham, Henry

Colvin, Michael

Bendall, Vivian

Conway, Derek

Bennett, Rt Hon Sir Frederic

Coombs, Simon

Benyon, William

Cope, John

Best, Keith

Corrie, John

Biffen, Rt Hon John

Couchman, James

Biggs-Davison, Sir John

Cranborne, Viscount

Blackburn, John

Crouch, David

Blaker, Rt Hon Sir Peter

Dickens, Geoffrey

Body, Richard

Dorrell, Stephen

Bonsor, Sir Nicholas

Douglas-Hamilton, Lord J.

Bottomley, Peter

du Cann, Rt Hon Sir Edward

Bottomley, Mrs Virginia

Dunn, Robert

Bowden, A. (Brighton K'to'n)

Durant, Tony

Bowden, Gerald (Dulwich)

Edwards, Rt Hon N. (P'broke)

Braine, Rt Hon Sir Bernard

Eggar, Tim

Brandon-Bravo, Martin

Emery, Sir Peter

Bright, Graham

Evennett, David

Brinton, Tim

Eyre, Sir Reginald

Brittan, Rt Hon Leon

Fallon, Michael

Brooke, Hon Peter

Farr, Sir John

Brown, M. (Brigg & Cl'thpes)

Favell, Anthony

Browne, John

Fenner, Mrs Peggy

Bruinvels, Peter

Finsberg, Sir Geoffrey

Bryan, Sir Paul

Fletcher, Alexander

Buchanan-Smith, Rt Hon A.

Fookes, Miss Janet

Buck, Sir Antony

Forman, Nigel

Budgen, Nick

Forsyth, Michael (Stirling)

Burt, Alistair

Forth, Eric

Butcher, John

Fowler, Rt Hon Norman

406

Franks, Cecil

Lyell, Nicholas

Fraser, Peter (Angus East)

McCurley, Mrs Anna

Freeman, Roger

Macfarlane, Neil

Gale, Roger

MacGregor, John

Galley, Roy

MacKay, Andrew (Berkshire)

Gardiner, George (Reigate)

MacKay, John (Argyll & Bute)

Gardner, Sir Edward (Fylde)

Maclean, David John

Garel-Jones, Tristan

McNair-Wilson, P. (New F'st)

Glyn, Dr Alan

McQuarrie, Albert

Goodlad, Alastair

Major, John

Gorst, John

Malins, Humfrey

Gow, Ian

Malone, Gerald

Gower, Sir Raymond

Maples, John

Griffiths, Peter (Portsm'th N)

Marland, Paul

Grist, Ian

Marlow, Antony

Ground, Patrick

Marshall, Michael (Arundel)

Hamilton, Hon A. (Epsom)

Mates, Michael

Hamilton, Neil (Tatton)

Maude, Hon Francis

Hanley, Jeremy

Mawhinney, Dr Brian

Hannam, John

Mayhew, Sir Patrick

Harris, David

Mellor, David

Harvey, Robert

Merchant, Piers

Havers, Rt Hon Sir Michael

Meyer, Sir Anthony

Hawkins, C. (High Peak)

Miller, Hal (B'grove)

Hawkins, Sir Paul (SW N'folk)

Mills, Iain (Meriden)

Hawksley, Warren

Mills, Sir Peter (West Devon)

Hayhoe, Barney

Mitchell, David (NW Hants)

Hayward, Robert

Moate, Roger

Heathcoat-Amory, David

Monro, Sir Hector

Heddle, John

Montgomery, Sir Fergus

Henderson, Barry

Moore, John

Heseltine, Rt Hon Michael

Morris, M. (N'hampton, S)

Hickmet, Richard

Morrison, Hon P. (Chester)

Hill, James

Moynihan, Hon C.

Hind, Kenneth

Murphy, Christopher

Hirst, Michael

Neale, Gerrard

Hogg, Hon Douglas (Gr'th'm)

Needham, Richard

Holland, Sir Philip (Gedling)

Nelson, Anthony

Holt, Richard

Neubert, Michael

Hordern, Peter

Newton, Tony

Howard, Michael

Nicholls, Patrick

Howarth, Alan (Stratf'd-on-A)

Normanton, Tom

Howarth, Gerald (Cannock)

Norris, Steven

Howell, Ralph (N Norfolk)

Onslow, Cranley

Hubbard-Miles, Peter

Oppenheim, Phillip

Hunt, David (Wirral)

Oppenheim, Rt Hon Mrs S.

Hunt, John (Ravensbourne)

Ottaway, Richard

Hunter, Andrew

Page, Sir John (Harrow W)

Hurd, Rt Hon Douglas

Page, Richard (Herts SW)

Irving, Charles

Parkinson, Rt Hon Cecil

Jackson, Robert

Parris, Matthew

Jenkin, Rt Hon Patrick

Patten, Christopher (Bath)

Jessel, Toby

Patten, J. (Oxf W & Abdgn)

Johnson Smith, Sir Geoffrey

Pattie, Geoffrey

Jones, Gwilym (Cardiff N)

Pawsey, James

Jones, Robert (W Herts)

Percival, Rt Hon Sir Ian

Jopling, Rt Hon Michael

Pollock, Alexander

Joseph, Rt Hon Sir Keith

Porter, Barry

Kellett-Bowman, Mrs Elaine

Portillo, Michael

Key, Robert

Powell, William (Corby)

King, Roger (B'ham N'field)

Powley, John

King, Rt Hon Tom

Price, Sir David

Knight, Gregory (Derby N)

Proctor, K. Harvey

Knight, Mrs Jill (Edgbaston)

Raison, Rt Hon Timothy

Knowles, Michael

Rees, Rt Hon Peter (Dover)

Lamont, Norman

Renton, Tim

Lang, Ian

Rhodes James, Robert

Lawler, Geoffrey

Rhys Williams, Sir Brandon

Lawrence, Ivan

Ridley, Rt Hon Nicholas

Lawson, Rt Hon Nigel

Ridsdale, Sir Julian

Lee, John (Pendle)

Roberts, Wyn (Conwy)

Leigh, Edward (Gainsbor'gh)

Robinson, Mark (N'port W)

Lennox-Boyd, Hon Mark

Roe, Mrs Marion

Lewis, Sir Kenneth (Stamf'd)

Rossi, Sir Hugh

Lightbown, David

Rost, Peter

Lilley, Peter

Rowe, Andrew

Lloyd, Ian (Havant)

Rumbold, Mrs Angela

Lloyd, Peter, (Fareham)

Ryder, Richard

Lord, Michael

Sainsbury, Hon Timothy

Luce, Richard

St. John-Stevas, Rt Hon N.

407

Sayeed, Jonathan

Stewart, Andrew (Sherwood)

Scott, Nicholas

Stewart, Ian (N Hertf'dshire)

Shaw, Giles (Pudsey)

Stradling Thomas, J.

Shaw, Sir Michael (Scarb')

Taylor, John (Solihull)

Shelton, William (Streatham)

Taylor, Teddy (S'end E)

Shepherd, Colin (Hereford)

Tebbit, Rt Hon. Norman

Shepherd, Richard (Aldridge)

Temple-Morris, Peter

Shersby, Michael

Terlezki, Stefan

Skeet, T. H. H.

Thomas, Rt Hon Peter

Smith, Sir Dudley (Warwick)

Thompson, Donald (Calder V)

Smith, Tim (Beaconsfield)

Thompson, Patrick (N'ich N)

Soames, Hon Nicholas

Thome, Neil (Ilford S)

Spence, John

Thurnham, Peter

Spencer, Derek

Townend, John (Bridlington)

Spicer, Jim (W Dorset)

Tracey, Richard

Spicer, Michael (S Worcs)

Trippier, David

Squire, Robin

Twinn, Dr Ian

Stanley, John

van Straubenzee, Sir W.

Steen, Anthony

Vaughan, Sir Gerard

Stern, Michael

Viggers, Peter

Stevens, Lewis (Nuneaton)

Waddington, David

Stevens, Martin (Fulham)

Wakeham, Rt Hon John

Stewart, Allan (Eastwood)

Waldegrave, Hon William

408

Walden, George

Wilkinson, John

Walker, Bill (T'side N)

Wolfson, Mark

Ward, John

Wood, Timothy

Wardle, C. (Bexhill)

Woodcock, Michael

Warren, Kenneth

Young, Sir George (Acton)

Watson, John

Younger, Rt Hon George

Watts, John

Wells, Bowen (Hertford)

Tellers for the Noes:

Wells, Sir John (Maidstone)

Mr. Carol Mather and

Wheeler, John

Mr. Robert Boscawen.

Whitfield, John

Question accordingly negatived.

Local Government (Prescribed Expenditure)

  BUSINESS OF THE HOUSE
  Ordered,
  That, in respect of the Cinemas Bill [Lords], Notices of Amendments, new Clauses, and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Neubert.]

Agricultural Research
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
11.22 pm
Mr. Brynmor John: I am grateful for the opportunity to discuss tonight the subject of the agricultural research budget, because there is no doubt that British agriculture is entering a very troubled period. I believe that it faces immense change, not as a consequence of the need to rectify inefficiencies but because its very efficiency has contributed surpluses in some foodstuffs. Dairy quotas have already come, and cereal limitation is shortly to be tackled.
The farming industry knows, as the National Farmers Union has recently stated, that the pattern of farming is likely to change both in support and in market requirement. The country will want, instead of just maximum production, which is what it has asked of its farmers for the last 40 years, the inclusion of product quality, dietary needs and environmental safeguards. These in their turn will lead to new products and to new production systems.
Farming cannot cope with this change without help. It needs Government advice and help which is based upon research as to how it should diversify and into what crops so that it can meet the changed requirements which the country asks of it.
It is at this very moment that the Government have chosen to imitate a hard-hearted Hannah who, as hon. Members will remember, was chiefly distinguished for pouring water on a drowning man.
In the last public expenditure review, in January, cuts in expenditure on research in agriculture by the Department amounted to £10 million for 1986–87 and £20 million for 1987–88. I understand that, of that total, MAFF's share is likely to be £8·25 million in the first of those two years and £16·5 million in the second.
I emphasise that this is not the first time that the research budget has been cut, but the second time in as many years. The Department of Education and Science science budget, much of which is devoted to the Agricultural and Food Research Council, has already been considerably cut. In 1984–85, the AFRC will suffer the loss of 550 jobs, of which 100 will be made compulsorily redundant. By 1987–88, that number will have increased to 1,200 job losses. I emphasise that those figures do not take account of the latest cuts of which I am speaking tonight.
The stupidity of the logic of making these cuts is nowhere highlighted more than by comparing what is spent in research costs with intervention costs. Total agricultural R and D is about £200 million, and MAFF's expenditure on R and D in agriculture is about £120 million. For 1986–87, our scheduled intervention costs for over-production under the system, which, on all hands, is accepted as requiring change, is £1·160 billion. That is a forecast amount, but the actual amount that we shall be spending next year on intervention will be £1·315 billion.
Of that figure, as a result of last year's increase in grain and other products alone, £189 million has had to be added to the budget, and £189 million is more than the total research budget of MAFF and almost as much as the total agricultural research budget. Yet if we want to reduce
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these surpluses and gain control of a system of agriculture that seems to be out of control, research geared to competitive and efficient production, but compatible with welfare and environmental costs, is desperately needed. That alone will reduce the cost of food and costs to the producer.
For example, the Minister's response to the COMA report—announced in a written answer yesterday —talks about the exclusion of the fattest quality of meat. But that of itself is a negative concept. It should be accompanied by positive research which will enable, for example, sheep farmers to produce marketable lean lambs which meet customers' demands. That must be the way forward. If we are to create, and satisfy, a demand for leaner meat, we must not only penalise the fattest meat but create and stimulate an industry which produces leaner animals.
The £20 million cut of which I speak is about 14 per cent. of expenditure. It will, I understand, mean the loss in total of 2,000 jobs, of which 1,000 will be scientists. That would be harsh, but, frankly, if it could be shown that our expenditure on agricultural R and D was already excessive, it would be a price that would have to be accepted.
But that, alas, is not true. If these cuts go ahead, the spending on agriculture and food research and development will be lower per capita than that in any other country in the EEC, with the exception of Greece and Italy, which are hardly agricultural models to follow. We must remember, too, that, as well as being our partners, other EEC countries are also our competitors, selling agricultural products in the increasingly competitive markets which can be forecast for the next decade They will have the advantage of a much better and bigger research backup.
The Minister, of course, will say that I am alarmist and that nothing has yet been said about job losses or the closure of establishments. That is true. The Government, in what is now an all too familiar pattern, having decided the ends, have neglected to indicate the means by which they will effect savings. Not the least cruelty in the whole process is the uncertainty about people's futures which has been aroused and which is being allowed to drift. The Minister will probably indignantly repudiate that by saying that the Priorities Board is already at work to solve the uncertainties by the allocation of resources between the different forms of agriculture and food research, taking into account future priorities. I will be asked why we should not leave it to the board.
I have no doubt that the Priorities Board will do the best it can, but it has already been given the answer to the sum. All it is being asked to do is to figure out the working to get to that answer. A sensible Government would have reversed the process, but the Government are not at all sensible when it comes to monetarism, even when the well-being of the country is being jeopardised, as it is here.
Nor can I accept that the Priorities Board should be charged with this task. It is not democratically accountable and it has no consumer representation. The Minister in answering the debate should say whether or not the report of the board will be publicly available. I suspect not. The passion which the Conservative party has for privatisation has led the Government to privatise matters which, like this one, are properly the responsibility of Government. Great anxiety has been expressed to me as to whom, if anyone, the board has consulted. None of the representatives to whom I have spoken has as yet been

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involved. We would welcome being told by the Minister in the response to the debate the date when the report of the Priorities Board is expected. I fear it will not be until late summer. If that is so, until that date both the AFRC and, more importantly, those engaged in the research will not know where the cuts will fall. That is a poor reward for the loyalty and devotion of the employees.
In the absence of firm data, I am forced to make certain assumptions in an attempt to press the Minister to be more definite. The first assumption is that MAFF research spending is divided almost equally between its internal research and research commissioned by the AFRC. If that is so, a fair working assumption would be that they will bear the cuts almost equally. I have already stated that in all some 2,000 jobs will disappear. Of these, I believe that it is fair to put a minimum figure of 700–800 on the jobs lost in the AFRC. Taken with its present job loss plans, which I mentioned at the beginning, the AFRC's job loss in the next few years will be 2,000.
Not only does a job loss of such magnitude represent a tragic waste of human potential, but it also puts in jeopardy the future of a number of establishments. Lord Selborne, the chairman of the AFRC, writing in Big Farm Weekly, has specified at least two as being at risk of closure. As to which they are, we must await the report of the Priorities Board. The most heavily supported by MAFF are the National Vegetable Research Station at Wellesbourne, the Poultry Research Centre at Edinburgh, the Glasshouse Crops Research Station, Sussex, and the East Malling Research Station at Maidstone. In Wales, is the unjustified threat to the Plant Breeding Station at Aberystwyth to be renewed?
"Ah," the Minister will say in one of the magic incantations that we now expect, "we want private money to come in, which means that all the jobs losses that are feared will not happen." It is impossible in the time scale to guarantee funding, certainly in an industry subject to a financial squeeze. In any event, the injection of such money would go to projects which are immediate and which would bear quick results. Private money will not be able to supplement Government money in the long-term research which is subject to the inevitable delays, vagaries and uncertainties. It is in that area that Government investment cannot be supplanted.
The long-term basis of agricultural research is now being destroyed. Even if it had its effects only in this country it would be criminal, but the truth is that it will also affect our ability to make a significant contribution to the conquest of the famine that affects much of the world. To do that in pursuit of savings which, in terms of global expenditure, are puny, shames us. The Minister must know that once a research programme is halted and a team broken up, it is difficult to put it together again.
For the sake of the highly qualified scientists, for the sake of our farmers who face an uncertain future without knowing how and where to direct their efforts, and for the sake of our reputation as a caring nation, I appeal to the Minister to reverse this harmful and unjustifiable decision.
11.36 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I am grateful to the hon. Member for Pontypridd (Mr.
412
John) for raising this important subject and allowing us an opportunity to talk about our plans relating to agricultural research and development.
Let me say at the outset that the Government fully appreciate the contribution which research and development make to the well-being of our agricultural industry and the community at large. The scale of our commitment is evidenced by the considerable sums of public money—to which the hon. Gentleman, to do him credit, referred—devoted to the agriculture programme by the Agriculture Departments and the Department of Education and Science. In 1983–84, expenditure on agricultural research and development was £160 million and, although it falls outside the strict terms of this debate, hon. Members may like to be aware that a further £40 million of Government funds were spent on food and fisheries research. This total expenditure of over £200 million of national resources is a clear indication of the importance that we attach to these subjects.
The objective of the research and development programme is to advance scientific knowledge relevant to agriculture and food in order to increase the efficiency of the industry while at the same time protecting the environment and preventing adverse social effects. I make that point because the hon. Gentleman seemed to suggest that this was a whole new area that required additional research. It has always formed part of research into this work.
The more basic research is carried out by the research councils with funds provided by my right hon. Friend the Secretary of State for Education and Science, from the science Vote. The funds from my own Department are devoted to work of more immediate importance to the industries, and those which are the responsibility of the Secretary of State for Scotland support the basic and applied research of Scottish agricultural research institutes and the development work of the Scottish agricultural colleges.
The Agricultural and Food Research Council is the main contractor for work commissioned by my Department on agricultural research and development. As hon. Members will no doubt be aware, the AFRC is a body which operates under a Royal Charter and it carries out its work by running or grant-aiding research institutes and by awarding research grants to teams of scientists in the universities. About half of its income is received from the science Vote and half from commissioned work. In 1983–84 the council received £45·8 million in grant in aid and £51·3 million from MAFF commissions.
In Scotland, as I have indicated, the Department of Agriculture and Fisheries is responsible for administering the seven Scottish agricultural research institutes which form part of the Agricultural and Food Research Service. The institutes contribute significantly to the agricultural research and development effort, particularly in relation to the soils, crops and livestock in the climate of northern Britain. The Department is also responsible for administering the three Scottish agricultural colleges which undertake development work in close association with their advisory and educational activities.
My own Department also carries out a major programme of agricultural research and development. About one third of the total effort of the Agricultural Development and Advisory Service is devoted to research and development. We run experimental husbandry farms and experimental horticultural stations which evaluate

413
research results and develop and integrate them into production systems that can be applied in commercial practice. There is also a network of central and regional science and veterinary laboratories, and a cattle-breeding centre, which are all concerned to a greater or lesser degree with research and development over a wide field. In addition, there is a good deal of local investigation of particular problems encountered by the industry. All this amounts to a considerable investment of public resources, costing some £40 million a year.
To achieve a fully co-ordinated approach to agricultural and food research and development, a priorities board was established in 1984 to advise the Agriculture Departments and the AFRC on research and development priorities and the allocation of research budgets. The board is small, with an independent chairman, Sir Kenneth Durham, chairman of Unilever, and a majority of independent members representing customer and scientific interests. Although the board is advisory, the Government expect that its advice will normally be accepted.
The hon. Gentleman wanted me to say whether the board's report would be made public. If its advice is sometimes not accepted, perhaps it would be as well for it not to be made public. However, when the Government appoint a board to advise them, it is expected that its advice will normally be accepted.
Representatives of the Agriculture Departments and the Agricultural and Food Research Council are on the priorities board and are therefore fully involved in the formulation of its advice. We believe that the board, which can take a view of national needs over the whole range of agricultural and food research and development has a major role to play in guiding the direction of the research effort. The hon. Gentleman did not give the board credit for being in a position to so advise the Departments.
It is against that background of a close and effective research partnership that I wish to set the Government's plans for future expenditure on agricultural research and development.
As my right hon. Friend the Minister of Agriculture announced on 22 January, provision for expenditure by the Agriculture Departments on research and development has been reduced by £10 million in 1986–87 and £20 million in 1987–88. There are no reductions in planned expenditure for 1985–86. The reductions in 1986–87 and 1987–88 are provisional and will be influenced by the scope for industry support of research carried out by the public sector. They should not be seen as casting doubt on the Government's appreciation of the value of agricultural research. Rather, they represent the view—I am sorry if the hon. Gentleman does not share it—that it is not unreasonable that the industry should bear part of the cost of a service from which it benefits. The financial arrangements that I outlined earlier indicate the scale of the Government's commitment to the research and development effort. We believe that there is scope for a change in the pattern of funding, so that the industry is more fully involved in contributing to the work which is being done and in determining the nature of that research effort.
The Agriculture Ministers have asked the priorities board to consider and advise on the allocation of resources between the different sectors of agriculture and food, taking account of future priorities for the direction of research and the scope and prospects for increased levels of industry funding. When we have that advice we shall consult the industry about the mechanisms which might be
414
appropriate for securing the greater involvement that we wish to achieve, and we shall be taking our decisions about the future direction of the research programme.
The poposed reductions in expenditure are shared as the hon. Gentleman suggested — £8·25 million to the Ministry of Agriculture, Fisheries and Food in 1986–87 and £16·5 million in 1987–88 because of the share with the Department of Agriculture and Fisheries for Scotland.
The revised expenditure plans and the move towards greater industry participation could clearly have significant implications for the Agricultural and Food Research Council and for the resources devoted to in-house research and development. There are likely to be some changes in relative priorities, and the industry is likely to be involved in areas in which it has not previously participated. At this stage, it is not possible to be precise about the scale and nature of these changes. We have made no change in the funds earmarked for research and development in the coming financial year to allow us to consider, in conjunction with all the parties involved, the way forward which will ensure maximum effectiveness of the revised arrangements.
The move towards greater industry participation accords with the initiative taken by the Advisory Board for the Research Councils in establishing a working party on private sector funding for the research councils. The working party, chaired by Professor Peter Mathias, is aiming to establish the facts about the present funding of scientific research by charities, industry and commerce and to consider what scope there might be for increasing the flow of such funds to the research councils and higher education.
The AFRC's recently published corporate plan recognises that if the scale of the council's research for the industries it serves is to be maintained it will be necessary to draw its support from elsewhere. The council already receives more than £2 million per annum from the private sector and over the planning period 1985 to 1990 will aim significantly to increase its funding from industry. We support this approach most strongly.
For the AFRC, the funds which we hope will be available through contributions from industry w ill take their place alongside the grant-in-aid from the science Vote and the revenue from other commissioned work. It will be for the AFRC to manage its resources within that total funding. I accept that concern has been expressed about the future of staff and institutes, but I do not think that it would be helpful to speculate on such aspects tonight. Decisions on these points depend on decisions yet to be taken on priorities and on the level of industry contributions. We recognise the importance of these decisions and will aim to provide clear guidelines for the future as rapidly as possible.
The hon. Gentleman gave figures which he said showed that we shall be below the levels of funding of EC countries except for Italy and Greece. There has been much debate about the appropriateness of the various indicators of relative spending on agricultural research and development. All of the methods have their limitations, but they can draw attention to some interesting questions. Different approaches can draw different conclusions. It is beyond doubt, however, that our agricultural research and development effort has been supported well by the Government. Even after the adjustments, we shall still

415
make a major contribution to the costs of that research programme. That contribution will stand comparison with all of our competitors.
I appreciate that we are to some extent breaking new ground in our efforts to involve industry more fully in the research and development effort, but we believe that this is the right way forward. When there are constraints on public expenditure, it makes good sense to encourage those who are likely to benefit from the work which is being undertaken to share in its costs. I recognise that the proposed expenditure reductions and the issues which have
416
still to be resolved on industry funding give rise to uncertainties for all those involved in the research and development effort. It should be remembered, however, that the Government will still be making a major contribution to agricultural research and development and that we shall be seeking the active co-operation of industry in our future plans. I am sure that through the arrangements that we are aiming to establish we can maintain a strong and effective research effort which will be of benefit to the industry and the country as a whole.
Question put and agreed to.
Adjourned accordingly at eleven minutes to Twelve o' clock.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.

Nuclear Missiles: East-West Balance
Lord Orr-Ewing: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the present East-West balance of longer-range intermediate range nuclear missiles in Europe.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, the Soviet Union has a significant advantage of about 3 to 1 in land-based LRINF missiles in Europe. This imbalance is even more marked since each SS20 has three warheads. Details are contained in the annual Statement of Defence Estimates.
Lord Orr-Ewing: My Lords, did my noble friend see the tables set out in yesterday's issue of The Times, which showed that, in terms of warheads, NATO has 96 warheads in Europe whereas the Soviet Union has more than 1,400 warheads? That is a ratio of 15 to 1. Does that not show the necessity of carrying on with disarmament talks and trying to persuade the new Soviet regime to reduce this massive imbalance?
Lord Trefgarne: My Lords, I am not sure that I agree with the precise figures which my noble friend offers, but certainly they are of that order. The figures also underline how impossible it is for us to agree to a freeze with that sort of imbalance existing.
Lord Carver: My Lords, can the noble Lord the Minister explain why he restricted his reply to land-based missiles? The Question asked by the noble Lord, Lord Orr-Ewing, refers to the total East-West longer-range intermediate-range nuclear forces. Surely the Minister's Answer should have included the Polaris and Poseidon submarines allotted to SACEUR, and all the French systems.
Lord Trefgarne: No, my Lords; I do not think it would have been right to include those figures. They never have been included, as the noble and gallant Lord will know. In any event, our system is of course a strategic system.
Lord Mayhew: My Lords, bearing in mind the fact that the Russians have deployed new intermediate-range missiles since the breakdown of the talks, can the Minister say how the balance today compares with the balance when those talks broke down?
Lord Trefgarne: My Lords, again I fear that I do not have the precise figures before me, but certainly there has been an increase in the number of SS20s deployed during that time.
Lord Jenkins of Putney: My Lords, as even a cruise missile is 15 times more destructive than the weapons used on Hiroshima, and since any one of them could destroy a city the size of London and all its inhabitants, is not questioning the numbers rather a lunatic exercise?
Lord Trefgarne: My Lords. I do not know about "a lunatic exercise", but it certainly makes all the more important the talks which are presently going on.
Lord Cledwyn of Penrhos: My Lords, was not the supplementary question asked by the noble and gallant Lord, Lord Carver, perfectly realistic in all the circumstances? Given that we are on the threshold of very important talks, would it not be best to allow them to proceed, hoping that they will be successful and that we may participate in due course, rather than have this rather useless exchange at this time?
Lord Trefgarne: My Lords, I certainly hope that the talks to which the noble Lord has referred will proceed and will be successful. The role of the United Kingdom is a peripheral one as far as those talks are concerned, because our own nuclear forces represent such a tiny part of the whole.

Telephone Boxes: Design
2.40 p.m.
Baroness Carnegy of Lour: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to make representation to British Telecom in favour of the installation of their new equipment and toughened glass in existing red telephone boxes rather than the replacement of the latter by yellow boxes of United States design, and by open canopies.
Lord Brabazon of Tara: My Lords, the Government do not intend to make representations to British Telecom about the design of call boxes. It would not be appropriate for the Government to intervene in a matter which is entirely for the judgment of the company.
Baroness Carnegy of Lour: My Lords, I thank my noble friend for that Answer. In spite of what he has said, may I ask whether local planning committees will be consulted before red boxes of Sir Giles Gilbert Scott's distinguished design are demolished wholesale? Furthermore, is there any chance that at least some of the existing boxes might be listed, as are, I believe, some pillar boxes?
Lord Brabazon of Tara: My Lords, British Telecom's proposals allow for detailed consultation with a wide range of interested organisations, including groups for the disabled, local authorities, environmentalists, planning associations and representatives of business. Noble Lords should make their views known directly to the company.
Lord Bruce of Donington: My Lords, can the noble Lord tell the House what endeavours were made to ascertain public reaction to the proposed new colour and new design? Is the noble Lord telling the House that, in spite of the fact that Her Majesty's Government still have a majority holding in the company, they are willing to dissociate themselves completely from the spread of this hideous yellow rash over the countryside?
Lord Brabazon of Tara: My Lords, British Telecom carried out a number of surveys and consulted widely before introducing their new proposals. I would point out that the Government do not hold a majority shareholding in British Telecom: theirs is a minority shareholding of 48½ per cent.
Lord Mackie of Benshie: My Lords, is the noble Lord, Lord Brabazon of Tara, too young to remember that the colour red has not always had a political connotation? Indeed, when I was young the colour red on the map represented the British Empire.
Lord Brabazon of Tara: My Lords, I am too young to remember that directly, but I certainly take note of the noble Lord's observation.
Baroness Macleod of Borve: My Lords, will the Minister use his good offices to encourage British Telecom to keep to the red telephone boxes, of whatever design, because in very thick fog, which we still get in this country, red can be seen whereas other colours cannot?
Lord Brabazon of Tara: My Lords, I understand that the new telephone boxes are to be made mainly of glass. However, they will be better lit than the existing boxes and should, therefore, be more visible.
Baroness Lane-Fox: My Lords, can my noble friend the Minister assure the House that, whatever design prevails, representations will be made by the Government to the company on the need for the disabled and those in wheelchairs to be able to use whatever telephone boxes are eventually chosen?
Lord Brabazon of Tara: Certainly, my Lords; this is very encouraging news, particularly for the disabled and wheelchair-bound users of the boxes. The new boxes will be much easier for them. The doors will be big enough for wheelchairs to enter. The boxes will be flush with the ground, with no step. The actual machinery will be placed lower down so that it can be used from a sitting position.
Lord Bruce of Donington: My Lords, will the noble Lord explain to the House what is so objectionable about pillarbox red? Is he aware that in your Lordships' House red is favoured, albeit of a rather deeper hue? Does he anticipate the re-covering of furnishings in your Lordships' House in this sickly yellow?
Lord Brabazon of Tara: No, my Lords, I do not anticipate that. On the other hand, I do not think we have proposals to sell your Lordships' House.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that what the noble Lord opposite calls a "sickly yellow" and a "yellow rash" could, by a less jaundiced eye, be seen as a golden glow?
Lord Brabazon of Tara: My Lords, I agree with my noble friend.
Lord Sandys: My Lords, will my noble friend tell the House what is the timescale of replacement and say whether large numbers of boxes are to be replaced in one area at one time or whether there will be a staged phasing over the country? Secondly, has the Royal Fine Art Commission been consulted about the design?
Lord Brabazon of Tara: My Lords, to answer my noble friend's last question first, I cannot tell him whether the Royal Fine Art Commission has been consulted. I shall endeavour to find out and then write to him. It is a 10-year programme which involves the replacement of about 60,000 red telephone boxes with expenditure approaching £160 million.
Lord Strabolgi: My Lords, bearing in mind that the noble Lord said earlier that a number of bodies and commissions had been consulted, and bearing in mind also that he did not know whether or not the Royal Fine Art Commission had been consulted, which I should have thought was crucial. will he say which bodies have been consulted?
Lord Brabazon of Tara: My Lords, I am afraid that I do not know the answer to that. I know merely that a number of bodies have been consulted, but I cannot give details as to which they are.
Lord Beloff: My Lords, does my noble friend the Minister not agree that the point about American telephone boxes is that the telephones in them actually work? Is that not the objective which British Telecom should have in mind?
Lord Brabazon of Tara: My Lords, that is indeed the objective that British Telecom has in mind. It proposes to convert the public telephones into a modern, reliable and clean service.
Lord Wallace of Coslany: My Lords, will the noble Lord say whether with the new boxes it will be easier to get your money back when you cannot get through?
Lord Brabazon of Tara: My Lords, I think that that is a matter for British Telecom. I am not quite sure how the new boxes will work.
Lord Brockway: My Lords, may I ask whether, in the light of the enormous usefulness and convenience of these telephone boxes, when they are being replaced, a tribute will be paid to Fred Jowett, who was Commissioner of Works and installed them as far back as 1924?
Lord Brabazon of Tara: My Lords, I think that the best I can do is draw the remarks of the noble Lord to the attention of the appropriate parties.

Family Practitioner Committees
2.48 p.m.
Lord Hunter of Newington: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement about the new role of family practitioner committees.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): My Lords, from 1st April 1985 family practitioner committees will be autonomous health bodies directly accountable to the Secretary of State. Within their statutory responsibilities they will continue to administer arrangements for the provision of family practitioner services; to monitor aspects of the quality of service provision, to investigate complaints and to inform the public, practitioners, community health councils, health and local authorities on matters for which they are responsible.
Lord Hunter of Newington: My Lords, I thank the noble Lord the Minister for that reply. Does the Minister agree that family practitioner committees do not have control of many of the factors concerned with family practitioner expenditure? How is it proposed to monitor this in the future? Secondly, will this new authority have responsibility for the recommended drug list, and if so, how?
Lord Glenarthur: My Lords, as regards expenditure, yes, the FPCs will be expected to monitor expenditure on the family practitioner services and also on their own administration. The management responsibilities of FPCs will encompass personnel, organisational and finance functions involving their own staff and administration. FPCs will be expected to operate within such guidelines and administrative cash limits as are notified to them.
As regards the limited list of drugs, any complaint that by prescribing or dispensing a scheduled item a doctor or pharmacist has breached his terms of service will be considered by the family practitioner committee in the normal way.
Lord Seebohm: My Lords, will the noble Lord let me know whether the new system will help or hinder closer co-operation between local authority personal social services and the health service?
Lord Glenarthur: My Lords, our belief is that it will help.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord tell the House what will be the estimated full cost of running these committees once they have taken over all their new functions?
Lord Glenarthur: My Lords, I am afraid that I do not have the figures for costs in front of me, but I shall let the noble Lord know.
Lord Kilmarnock: My Lords, can the noble Lord tell the House whether the family practitioner committees under their new status will be cash limited? If so, how will that affect their capacity to employ more ancillary staff with the object of providing more services at primary level? Would all those doubts not be cleared up if the Government were finally to publish their Green Paper on primary care?
Lord Glenarthur: My Lords, cash limiting family practitioner services was one of the options which Binder Hamlyn was asked to look at, and until we have completed our studies of that report and the related issues no decisions will be taken on it. So far as publishing the Green Paper is concerned, the noble Lord will be aware that it pulls together other strands, apart from those contained in the Binder Hamlyn report. The noble Lord will have to wait and see.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that his negative answer to my noble friend Lord Cledwyn causes concern? The Government must have an idea of the cost of these committees. Will he eventually make the House aware of what the total cost is? Secondly, what will the relationship be in the future between community health councils and the new family practitioner committees?
Lord Glenarthur: My Lords, so far as cost is concerned, I am sorry, I do not have the figures. I shall of course let the noble Lord know what they are. To turn to the relationship with community health councils, the existing arrangements will continue and community health councils will have the role that they have at present. The importance of family practitioner committees generally should encompass district health authorities, community health councils and all those associated with them.
Lord Wells-Pestell: My Lords, I gather from what the Minister said that family practitioner committees are to be autonomous. If there is a dispute as to any action they take or decision that they make, who will be able to question it?
Lord Glenarthur: My Lords, we took the decision to change the status of FPCs—and I think that the noble Lord probably took part in the debates on the Bill last summer which dealt with this—because we saw an opportunity to increase the emphasis on primary health care within the NHS as a whole. The arrangements that will exist from 1st April will mean that FPCs are directly accountable to my right honourable friend the Secretary of State.
Lord Bruce of Donington: My Lords, will the noble Lord take steps to ensure that the figures for costs which he promised to let my noble friend Lord Wallace have are made available to the whole House? There is a public interest in this matter.
Lord Glenarthur: Yes, of course, my Lords. If the noble Lord would like to put down a Written Question I shall give the figures in that form; or, alternatively, I can put a letter in the Library. I can do whichever is suitable to the noble Lord.
Lord Bruce of Donington: My Lords, is the noble Lord aware that that answer is not satisfactory? He promised to let my noble friend have the figures. All that I am asking is that he should let the whole House have them at the same time.
Lord Glenarthur: Precisely, my Lords. That was why I was suggesting a suitable device for doing that which would be available for all to see. If the noble Lord has any other means that he would like me to use, of course I shall do so. However, I think perhaps a Written Answer would be the best way; although if he wishes me to pursue another avenue I shall certainly consider it.
Lord Hunter of Newington: My Lords, may I ask the Minister whereabouts he says the Government are envisaging an expansion of general practice in the future with an increase in the variety of services offered, as is hoped for by the general practitioners?
Lord Glenarthur: My Lords, the noble Lord asks a very wide question, but it is the policy of the Government to make the best use of the resources available in all the different parts of the health service.
Lord Diamond: My Lords, does the noble Lord recollect that the normal practice of informing the House following a Question is that the Ministry, via the Private Office, advises the Library and that the Library has the information available? Is he further aware that, having checked that following a Question which I put to the Leader of the House, I find that it is working very well?
Lord Glenarthur: My Lords, I am delighted that the noble Lord finds that the system is working well. If in this particular case that is considered to be the best way of dealing with the problem which has arisen, I shall deal with it in that way.

British Telecom: Tenders
2.55 p.m.
Lord Mottistone: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why no action appears to have been taken to ensure that the terms of Section 3, subsection (2)(h), of the Telecommunications Act 1984 have been met in relation to recent tenders called for by British Telecom for digital exchange systems which were limited to overseas companies only.
Lord Brabazon of Tara: My Lords, the licence granted to British Telecom under Section 7 of the Act takes full account of the duties set out in Section 3. As British Telecom is a private-sector company, its choice of a second digital switching system is a commercial decision.
Lord Mottistone: My Lords, while I thank my noble friend for that Answer, may I point out that it really does not go quite far enough in view of the fact that
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British Telecom is such a vast monopoly and has more power than it should have? Would it not have been more in keeping with the duties in the reference that I gave to have given an opportunity to the manufacturers of System X at least to tender last October?
Lord Brabazon of Tara: My Lords, British Telecom's decision to introduce a second digital switching system into the main network is intended to accelerate its modernisation programme and to provide a yardstick against which the competitiveness of System X can be measured. That is why it went to other manufacturers, I believe, and not to the manufacturers of System X.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the requirements laid on British Telecom in terms of the statute as cited by the noble Lord, Lord Mottistone, are quite specific? The requirements on British Telecom are to enable persons procuring telecommunications apparatus in the United Kingdom to compete effectively in the supply of such apparatus. How can British firms compete if they are not permitted to tender and no inquiry goes out to them? Will the noble Lord give the House an assurance that the attitude of British Telecom has in no way been influenced by the outrageous attack on GEC last Friday by his right honourable friend the Secretary of State for Wales, as reported in the Financial Times of the next day?
Lord Brabazon of Tara: My Lords, as to the second part of the noble Lord's question, I am not fully familiar with what my right honourable friend said about GEC and therefore I would not wish to comment upon it. Regarding the introduction of the second digital switching system, the pre-evaluation proposals went to six companies, of which one, a British company, STC, was involved. This was then narrowed down to three companies which were invited to tender—Northern Telecom, Thorn-Ericsson, which is, I believe, 50 per cent. British in any case, and AT and T/Philips—and they made offers which were technically and commercially acceptable to BT.
Lord Orr-Ewing: My Lords, does my noble friend recall that on 16th February last year we debated this matter extensively and the Opposition were probing very carefully to see whether British Telecom would keep to the 95 per cent. purchase of British equipment? Is it not therefore the responsibility—which was laid under the subsection referred to—of the Secretary of State and Oftel to see that British firms are given a proper opportunity? Can my noble friend say whether that 95 per cent., which we were assured came from the noble Lord, Lord Cockfield, in reply, is being upheld, or is this to be whittled away by the present intentions of British Telecom?
Lord Brabazon of Tara: My Lords, I understand that the order for the new System Y will amount to about 10 per cent. of British Telecom's requirements. I understand also that those manufacturers—although I am not entirely clear how it will be done—will give substantial orders to be made in this country.
Lord Thorneycroft: My Lords, I represent telecommunications interests and I declare my interest. I ask the noble Lord whether he is aware that unless the British electronics industry can open up its ideas to the whole of Europe, and persuade Europe to open up that market to us, there is little prospect of our being able to compete in future with either the Japanese or the Amercans.
Lord Brabazon of Tara: My Lords, I am most grateful to my noble friend for his remarks. If British Telecom is giving a yardstick against which the competitiveness of System X can be compared, I should have thought that was admirable.
Lord Mackie of Benshie: My Lords, with regard to the earlier less friendly question from his noble friend the noble Lord, Lord Orr-Ewing, can the Minister say whether they are sticking to the 95 per cent. British orders as promised in the previous debate?
Lord Brabazon of Tara: My Lords, I am afraid I cannot answer that. I have a figure: as I said, I am told that the figure on this new order would be about 10 per cent. I am not aware of the promise of 95 per cent. which was made; I shall have to look into it and write to the noble Lord.
Lord Morris: My Lords, does not my noble friend consider that he has been most seriously ill-advised to hide behind the skirts of commercial decision in his original Answer? I ask that because the Act makes it quite plain that it is the duty of both the Secretary of State and the Director-General of the Office of Telecommunications to exercise their functions in such a way as to enable those producing telecommunications apparatus in the United Kingdom to act in a fair and proper manner.
Lord Brabazon of Tara: My Lords, I am informed that there is no basis for the inference that the Government refused to intervene. Any understanding of that kind would have led the Government into immediate conflict with its international obligations under GATT and the Treaty of Rome.
Lord Bruce of Donington: My Lords, perhaps I may ask the noble Lord an easier question. Will the noble Lord unequivocally confirm to the House that it is the intention of Her Majesty's Government to comply with the law, with Section 3(2)(h) of the Telecommunications Act 1984, as mentioned by the noble Lord, Lord Mottistone, in his original Question?
Lord Brabazon of Tara: My Lords, naturally, the Government will always conform with the law, especially when it is in Acts which they have themselves brought in.
Lord Shinwell: My Lords, is not the noble Lord misunderstanding—I am not saying that he is being misleading—the purport of these questions, which is that when we adopt a new technique in electronics or in any other project, there is a danger of creating more unemployment unless British firms receive a fair share of the work? What is the answer to that?
Lord Brabazon of Tara: My Lords. I am sure that the noble Lord is quite right. However, if British industry is to continue to be competitive, or is to become as competitive as possible, it is in my view essential that there should be some element of a spur to make sure that it is competitive.
Lord Shinwell: But, my Lords, is it not likely that sometimes you can be over-competitive and yet create more unemployment? Is not that a factor to be taken into consideration?
Lord Brabazon of Tara: My Lords, I think that the more competitive industry becomes. the more chance it has of receiving overseas orders and creating employment.
Lord Molloy: My Lords, would the noble Lord not agree that the first of the points enumerated in the supplementary question of the noble Lord, Lord Mottistone, is of fascinating interest to many of us in this House and to many people in the City, in industry and in commerce? The noble Lord was quite honest and said that he did not know what his right honourable friend the Secretary of State for Wales said last Friday. That inhibits us from asking further questions on that point. Will he therefore please find out what his right honourable friend said and then write to my noble friend Lord Bruce of Donington with his views on the statement made by his right honourable friend?
Lord Brabazon of Tara: No, my Lords: I think that what my right honourable friend said is his affair. No doubt when I read what he said I shall understand it better.
Lord Glenamara: My Lords, in view of what the noble Lord, Lord Shinwell, has said. how can we ever make an impact on the appallingly high level of unemployment in this country when a major utility such as British Telecom limits the tenders for a major order to foreign firms? Cannot a 49 per cent. shareholder assert some influence in such a situation?
Lord Brabazon of Tara: My Lords, in the prospectus for British Telecom the Government made it quite clear that:
"Her Majesty's Government does not intend to use its right as an ordinary shareholder to intervene in the commercial decisions of British Telecom".
Lord Mottistone: My Lords, if the manufacturers of System X had been allowed to tender, maybe they would not have got the contract, but at least they would have known what was the specification. That would have helped them to improve their manufacture in the future so as to make themselves competitive in the world, as my noble friend Lord Thorneycroft so clearly pointed out to us. Indeed, as my noble friend the Minister has said, it would also have helped the unemployment situation by making us more competitive in the world market. This particular ploy has not helped manufacture in Britain and I submit to your Lordships is therefore still contrary to Section 3(2)(h).
Lord Brabazon of Tara: My Lords, British Telecom has made it clear that System X will remain the dominant system in the United Kingdom network and it has placed huge orders with the suppliers of System X, GEC and Plessey. Providing those companies are competing effectively, they will have nothing to fear from whichever second source BT chooses. However, I hope that the two United Kingdom suppliers will use their large BT ordering programme as a springboard from which to pursue with vigour export opportunities.

Business
3.5 p.m.
The Earl of Swinton: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Avon will, with the leave of the House, repeat a Statement that is to be made in another place on the British National Oil Corporation.
It may also be for the convenience of your Lordships if I announce that the debate on the Motion of my noble friend Lord Home of the Hirsel, on relations with the Soviet Union, which was originally to have been taken this afternoon, will now be taken on Tuesday, 23rd April, and not on Monday, 22nd April, as announced by my noble friend the Chief Whip on Monday.

Representation of the People Bill
3.6 p.m.
The Minister of State, Home Office (Lord Elton): My Lords, I beg to move that this Bill be now read a second time.
This Bill had its origins in the first report from the Home Affairs Select Committee of another place, Session 1982–83, on the Representation of the People Acts. That report was published in April 1983. Its main recommendations were: an extension of the franchise at parliamentary and European parliamentary elections to British citizens resident in the European Community; changes in absent voting arrangement to enfranchise electors who are away on holiday on polling day; an increase in the deposit required of a candidate at a parliamentary election from £150 to 1,000, together with a reduction in the threshold for forfeiture; and a reduction in polling hours. The Select Committee's work on the franchise was paralleled by the European Committee of your Lordships' House which, at about the same time, also recommended an extension of the franchise at European Parliament elections to British citizens in the European Community, but only for a period of 10 years after they leave the United Kingdom.
After the 1983 General Election the Government decided that the time was ripe for a major Representation of the People Bill, the first since the 1969 Act lowered voting age to 18. Changes in electoral law have always been preceded by consultations between the parties represented in another place. The parties were accordingly consulted on the Select Committee's report at the end of 1983. As a result of those consultations, the Government published a White Paper outlining their proposals for change. Most of
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these proposals were in accordance with the Select Committee's recommendations, but there was one significant change—the proposal to limit the period for which a British citizen may vote while resident abroad to seven years after departure. The White Paper proposals formed the basis of the Bill as introduced in another place, but as the Bill went through my right honourable friend engaged in further consultations with the parties and further change were made. The Bill which is now before your Lordships' House is thus substantially an agreed measure, and it was given an unopposed Third Reading in another place.
Clause 1 gives British citizens resident abroad the right to vote in parliamentary elections for a period of five years after the expiry of the last register in which they were included before departure. I ask noble Lords to note that period of five years; although it is correctly printed in the Bill, it is wrongly stated as seven year in the explanatory memorandum. The correct term is five years, not seven. The Government have made it clear that we should have preferred a longer period, either the seven years proposed by the White Paper or something longer still. But we accept that on a major constitutional issue of this kind no Government should seek to impose change on those with sincerely held reservations about the principles involved. The importance of the Bill is that it establishes the principle that British citizens should not be disfranchised solely because they are not resident here on the qualifying date. British citizens working abroad in either the public service or the private sector make an invaluable contribution to British interests. It is no longer acceptable that they should have no say in this country's affairs.
Clause 2 deals with the mechanics. It allows a person who qualifies as an overseas elector in relation to a particular constituency to make an overseas elector's declaration by virtue of which he may be included in the register of electors. The procedure is based on that which already exists for service voters. An important change which was made to this clause in another place was the addition of paragraph (e) to subsection (3). This requires the overseas elector's declaration to include a statement that he does not intend to reside permanently outside the United Kingdom. This means that a person who has left the United Kingdom to take up permanent residence abroad will not be able to get a vote under the new provisions.
Clause 3 extends the new arrangements to European Parliament elections. Subsections (2) to (9) are of particular interest to your Lordships' House because they entitle noble Lords (who, of course, do not have the right to vote at parliamentary elections) to make an overseas elector's declaration solely in relation to European Parliament elections. I should at this point say that the Bill does not give overseas electors the right to vote at local government elections.
As your Lordships may be aware, the Council of Ministers has resolved to renew its efforts to reach agreement on a uniform electoral procedure for European Parliament elections, including agreement on a uniform franchise, in time for the next elections in 1989. The Government have made no secret of their preference for a uniform franchise based on the so-called residence principle. This would involve each

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member state giving the vote at European Parliament elections to nationals of other member states who are living there. But it would clearly be indefensible, in the absence of agreement, not to extend the franchise at European Parliament elections in the same way as is proposed for parliamentary elections. That is what is achieved by Clause 3. It is broadly in line with the recommendation of your Lordships' European Committee, although it is a matter of regret to the Government that there was not general support for the ten-year limit on the extension which that committee recommended.
The next important part of the Bill is Clauses 5 to 11. These replace the existing provisions of the 1983 Act on absent voting, which have become very difficult to understand, and they make a number of significant changes. The biggest change comes in subsection (1) of Clause 7. This extends the right to vote by post or proxy to all those electors who cannot reasonably be expected to vote in person at the polling station, most notably those who are on holiday on polling day. It is a matter of great satisfaction to the Government that this long-sought reform now has the agreement of all the parties represented in another place.
The Bill proposes other notable changes. First, it gives all absent voters the right to vote either by post or by proxy. The right is subject to the existing requirement that those who vote by post must provide an address within the United Kingdom to which a ballot paper may be sent. The Government would have preferred to have given absent voters who are outside the United Kingdom on polling day the right to vote by post, but on this, as on other points, we bowed to the view of another place. Another significant change, which may not be apparent from the face of the Bill, is that it extends postal and proxy voting to parish and community council elections in England and Wales. This corrects a shortcoming of the present law which the Government have often been asked to put right, and I am glad that we could take the opportunity to do so.
Clause 10 calls for special mention. The Government's initial view was, as I have said, that the new absent voting arrangements could not be made to apply in Northern Ireland. Intimidation of postal voters and other forms of malpractice are common in the Province, and increasing the numbers of postal voters could only have added to the opportunities for abuse. It became clear, however, that our original proposals were not acceptable, and we have therefore adopted a different approach. While Clauses 7 to 9 put the right to a postal or proxy vote on the same basis in Northern Ireland as in Great Britain, Clause 10 empowers the Secretary of State, if he is satisfied that it is necessary to do so in order to prevent serious abuse of postal voting, to introduce the special polling arrangements for which provision is made in Schedule 1. Under these arrangements, a Northern Ireland elector who is in Northern Ireland on polling day but who cannot vote at his own polling station may apply to vote in person at one of a number of special polling stations throughout Northern Ireland. So long as these arrangements are in force, Northern Ireland electors may not apply for ballot papers to be sent in respect of a particular election to addresses in Northern Ireland. The Government hope that they will not have to
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exercise the power in Clause 10, but if it should become necessary to use it the power is there.
Clause 13 deals with the deposit. At present, a candidate at a parliamentary election is required to deposit with the returning officer the sum of £150 which is returned in full if the candidate polls more than one-eighth, that is to say, 12 per cent., of the total votes cast in the constituency. The deposit has stood at its present level since 1918, and both the Select Committee and the Government took the view that an increase was necessary to reduce the number of purely frivolous candidatures which have become such a feature of recent elections. The Select Committee proposed—and so, originally, did the Government—that the increase should be to £1,000. This would still have been rather less than half the level at which the deposit would now stand had its value kept pace with inflation. However, the proposal was widely criticised, and during the Committee stage the Government accepted an amendment bringing the increase down to £500. The Bill also reduces the level of the threshold to 5 per cent., or one-twentieth, of the total votes cast in the constituency, to protect the interests of the smaller parties. Few candidates outside the major parties can keep their deposits with the present 12 per cent. threshold. The 5 per cent. threshold gives them a significant chance of doing so.
That is the last of the major changes introduced by the Bill, but as your Lordships will have seen over half its pages are taken up with smaller changes in the electoral machinery. We have taken this opportunity of reviewing the whole field of electoral law to see what changes are desirable. Wherever possible, the changes have been the subject of consultations with the political parties and local authority associations in the usual way.
Clauses 15 to 17 introduce a general system for the combination of polls when more than one election is held on the same day. When the 1979 parliamentary general election was held on the same day as the ordinary district councils that year, special legislation had to be passed to combine them. Clause 18 postpones the ordinary day of election in 1986 for a week in response to representations from the Board of Deputies of British Jews. Clause 19 simplifies and rationalises the various provisions relating to the computation of time for electoral purposes. Clause 20 replaces provisions of the Meeting of Parliament Act 1797 under which the old Parliament is recalled if a demise of the Crown occurs after dissolution at a general election with a provision postponing polling day by a fortnight.
Clause 21 puts right a defect in parish and community council elections to which our attention was drawn by the National Association of Local Councils. Clause 22 makes it easier for my right honourable friend to prescribe versions of statutory elections forms partly in English and partly in Welsh. Clause 23 gives effect to the new penalities for corrupt and illegal practices and other election offences for which provision is made in Schedule 3. Clause 24 gives effect to the whole host of minor amendments to the 1983 Act listed in Schedule 4. Finally, Clause 25 reinstates a provision which was inadvertently repealed by the Police and Criminal Evidence Act 1984.

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This is a substantial Bill, which makes a number of important changes in our electoral arrangements. The Government have done their best to accommodate views put forward from different points of the political spectrum, and I understand that the proceedings in another place were conducted with an unusual degree of harmony and consensus. The Bill was even, as I say, given an unopposed Third Reading. I believe your Lordships will wish to give it a swift passage on to the statute book so that its provisions can be fully implemented in time for the next general election (whenever that may be). I commend it to your Lordships' House. I beg to move
The Deputy Speaker (Lord Aberdare): The Question is—
Lord Broxbourne: My Lords, before my noble friend the Minister sits down, would he be good enough to comment on a short point, as I do not propose to trouble your Lordships with a speech on Second Reading?
Lord Elton: My Lords, I am in a little difficulty. My noble friend on the Woolsack has not put the Question. This is a Second Reading debate to which I shall be replying, and I can therefore give the answer that the noble Lord wants if he asks his question in the gap.
Lord Davies of Leek: My Lords, may I ask that—
The Deputy Speaker: The Question is that this Bill be now read a second time.
Lord Broxbourne: My Lords, may I now put Noble Lords: No!
Baroness Trumpington: My Lords, I really do think that we must stick to the list of speakers. There is a gap in which any noble Lord who wishes to speak may put his name.
3.22 p.m.
Lord Mishcon: My Lords, is it in order in this ancient home of deprived citizens (in this context) to say that franchise is the very air which our British parliamentary democracy breathes? Therefore, when a Bill of this kind comes before Parliament it deserves to be looked at with the greatest of respect but also with the greatest of attention.
We are always grateful to the noble Lord the Minister for the way in which he introduces those Bills with which he is charged and his subsequent treatment of them; we are no less grateful on this occasion. I must confess, however, that I thought it was a most unusual compliment to my right honourable friend Mr. Gerald Kaufman to say that this Bill was treated in the other place in a very calm atmosphere. I have had the privilege of studying the Second Reading debate in another place and I shall report to my right honourable friend that his language—which I thought was the usual form—has been interpreted by the noble Lord the Minister as being most moderate and charitable.
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It is a great shame—and it was the first point that I was going to make on this Bill—that a constitutional matter of this kind affecting such an important subject as franchise did not appear to merit, in spite of what was said by the noble Lord the Minister, very much consultation at all. One of the things which I noted as being complained of in the other place at this very peaceful Second Reading was the lack of consultation which had taken place. Indeed, it is a parliamentary tradition, as I understand it, that matters of this kind—so that they may be as non-controversial as possible, and so that one may get the maximum amount of agreement—are dealt with at a Speaker's Conference. No such Speaker's Conference was held on this occasion, and the result of this was that there were many debates, many arguments, and many amendments which were put down and which took a great deal of time in another place. I think that is to be regretted.
This Bill flows—as the noble Lord the Minister has said—from the deliberations of the Home Affairs Committee which sat upon Representation of the People Bills of the past. They issued a report, the Government issued a White Paper and there was a debate upon that in the Commons in June of 1984. That was all that preceded the introduction of this Bill into another place.
Possibly, I ought now to turn to the Bill itself and I propose, with your Lordships' permission, to deal with three things which are in the Bill and three things which are not and which, in my submission, should be in the Bill. First of all, I shall deal with what is in the Bill. As the noble Lord the Minister quite rightly said, the vote is to be given to those who are genuinely on holiday. I was surprised to find that on average the number of people who are deprived of this great privilege of a citizen because they are on holiday is some two million. I think therefore that your Lordships will welcome, as do we on these Benches, the inclusion in the electoral right to register a vote of people who are genuinely on holiday.
What I think is a little regrettable is that that right, as I understand it, is still to be withheld from citizens of Northern Ireland. It is an odd situation—is it not?—that you could have two citizens in adjoining bedrooms in an hotel in France, one of whom was a Northern Ireland citizen currently resident in Northern Ireland, and the other a Northern Ireland citizen who had ceased to be resident in Northern Ireland; in precisely the same election one would have a vote and the other would not. That strikes me as an oddity that we ought to be looking at in the course of the passage of this Bill. Having said that, perhaps I may repeat that we on these Benches welcome the inclusion of the genuine holidaymakers whether they be in the United Kingdom itself or whether they be abroad.
Now I come to the second matter dealt with in this Bill—dealt with in its very opening clauses—and that is the right of the expatriate to be given a vote. The noble Lord the Minister, while paying very courteous and deferential respect to the Home Affairs Select Committee, did not mention to your Lordships that a recommendation of that committee which confined this right to those who left this country and went by way of residence to another country in the EEC, only got through by five votes to four. Your Lordships may

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well think that it is by no means a very well backed recommendation to give the right to vote in our parliamentary elections to expatriates, limited now to five years after they leave these shores. Is it a very sensible provision? Is it very sensible to include those expatriates who decided to leave this country because they did not like paying taxes? Is it right to give this right to people who have fled our shores in order not to come up against our criminal courts? It seems very odd, does it not?
Quite obviously, one extends this right immediately to members of the diplomatic service, to members of the Armed Forces and to those who are on official duty abroad. But is it right for people who can influence near-vote elections—and we have had examples of it—where a government are in by a small majority? Is it right that those who have voluntarily decided that they are not going to pay any of our taxes at all should be responsible for electing a government who pass Finance Acts? Is it right that those who have fled our shores in order to avoid coming before our criminal courts should influence the election of a government who may be dealing with a Criminal Justice Bill? These seem to be oddities, and it seems to Members on these Benches to be necessary, without any doubt at all, that we should certainly have a right to vote for those who are abroad on official duties; but to extend that right, in our view, is wrong.
Baroness White: My Lords, will my noble friend forgive me for intervening? Some of us were deeply disturbed by his representations on this particular matter. We are, after all, members of the European Community. There are many persons who are working on behalf of that Community who are not officially employed by Her Majesty's Government but who are nevertheless rendering a service to their country and should be given greater consideration than my noble friend has found it proper to afford.
Lord Mishcon: My Lords, may I thank my noble friend for that intervention, because she enables me to repeat the words that I used. I specially used very broad terms. I said, "those on official duties". I did not say, "those who are on duties, employed by Her Majesty's Government on official business". I intentionally said, "official duties", and I have no doubt that at the Conmittee stage one can define what official duties may be.
Baroness White: My Lords, I am sorry to interrupt again, but there are in Brussels many representatives of British industry and commerce—banking, financial institutions and other reputable bodies—who are also working on behalf of or in connection with the European Community.
Lord Mishcon: My Lords, again, if I may say so to my noble friend—whose views I obviously respect, as will the House—this is a question of defining those who should have the privilege of a vote, and this can be dealt with possibly at subsequent stages of the Bill. The main point that I made was this: to put under a very broad umbrella all those who happened to be resident abroad, for whatever reason they have left our shores, seems to be a very wrong thing to do, especially when all of us know that some of our citizens have
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decided to be resident abroad purely and simply because they did not wish to pay taxes in this country. If there be a principle of no voting or no representation without taxation, presumably that principle should apply.
May I ask the House, as well as my noble friend, with great respect: in regard to our electoral law what are the things that decide? Is it not uniformity as the first principle? In regard to uniformity, are not those of us resident in this country who are British subjects bound to register, by law, and is there uniformity when various people resident abroad will have the option as to whether or not they register? Furthermore, is there not uniformity in our case that there should be residence within the United Kingdom, and does it not breach that fundamental law, except for the matters that my noble friend dealt with, if those who decide to be resident abroad, for no other purpose—I repeat—than to evade our tax laws or to evade our criminal laws, are included in this right to vote, which can be so important in affecting which government we have or do not have?
Baroness Elles: My Lords, will the noble Lord allow me to intervene? Would he agree, nevertheless, that a citizen who has residence in this country but consistently and systematically evades our tax laws, and also disobeys our criminal law, still has the right to vote even though he is resident in this country?
A noble Lord: My Lords, not if he is in prison.
Lord Mishcon: My Lords, it would indeed be a difficult thing to decide who of our citizens evaded tax and who did not.
Baroness Elles: My Lords, would the same apply to a citizen who lives abroad?
Lord Mishcon: My Lords, it may very well do so. But if you had a category of those who are resident abroad for reasons of business, for reasons which are useful to this country, and the category that I spoke of, and that we all speak of with great respect—the forces, the Diplomatic Corps; you can go on beyond that, quite obviously, to those who are on official duties, whatever they may be—you can obviously define them and you can decide, by reason of their decision to reside abroad, whether or not others come within those categories. I know of no language at all in a statute which would be able to decide who of our citizens resident in this country had paid all the taxes they should or should not. If I may continue—
Lord Broxbourne: My Lords, I am much obliged to the noble Lord for giving way, with his characteristic courtesy. Can he comment on the position of one specific category? I refer to the officials serving in the European Parliament. He may have seen the submission of some of them. The noble Lord puts his point on the question of liability to taxation. Has he considered the effect of Article 14 of the protocol on the privileges and immunities of the European Communities, which provides that British officials of the institutions remain resident, for tax purposes, in this country? Would it not follow from that that any curtailment or denial of voting rights to them would

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constitute an infringement of the principle of no taxation without representation?
Lord Mishcon: My Lords, I am flattered by the number of interventions, all of which are courteous and helpful. I hope I shall be forgiven if, because of them, I go on for a little longer than I had intended to do, out of consideration for your Lordships. I merely answer the intervention of the noble Lord in this way. I have at no time suggested that those who, fortunately or otherwise, do not pay taxes in this country should be excluded from the right to vote if they happen to be living abroad. It happens to apply to everyone who has decided not to be resident in this country. As I understand the situation, they will not be liable to taxation in this country provided the Revenue is satisfied that they are in fact now resident abroad. I was merely saying that it seems a rather unfortunate state of affairs if, within provisions which may have the greatest of justification in certain circumstances, we include among those who are entitled to elect a government who decide upon our taxation those who have deliberately left this country in order to avoid taxation. That is a very different point, if I may say so, from that which the noble Lord was quite properly making.
I turn, for the second question upon which I want to address your Lordships, to the matter of the deposit. It seems to us on these Benches a wrongful use of the deciding factor, as to whether someone is a genuine candidate for parliamentary election or what I believe has been termed a "freak" candidate, to ask what is the state of his bank balance. Where he becomes genuine is presumably where he is able to put down a £500 deposit as against the £150, which the noble Lord the Minister was quite right in reminding us dates from 1918. If we are to look at the deposit provisions again, is it not much more sensible to decide that matter by seeing how many supporters of the nomination can be found? If one looks at that as the deciding factor, one finds that one is deciding upon a proper democratic basis, and not making money the determining factor.
Having spoken about those three factors, may I merely say that there are certain matters which are not dealt with in the Bill and perhaps I may very briefly deal with them. The first I can deal with very briefly because I believe that the noble Lord, Lord Allen of Abbeydale, will deal with this matter in much greater detail and with much greater authority. The matter concerns the voting rights of people in mental illness hospitals and mental handicap hospitals, many of whom are there purely and simply because unfortunately our community does not manage to house them and look after their needs elsewhere.
Under the present state of the law, those people cannot use the hospital in which they reside as an address of residence for election purposes. That means that they must give another address, very often outside their own constituency and outside the place where they would expect to vote. As I have said, this is a matter with which I believe others with greater authority than I dare present to your Lordships will deal later in the debate.
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I turn briefly to two matters which I believe will command the sympathy of your Lordships, although the noble Lord the Minister will no doubt say when he replies whether one of them can be dealt with in the Bill. The first is the matter of the public meeting place and the right given—and it is a very generous right—to parliamentary candidates in an election. They have certain privileges in regard to the public meetings that they hold and the places at which they hold them. One party in particular—and I refer quite openly to the National Front—uses these privileges at election time and does so with no intention at all of having a genuine public meeting. Indeed, it seeks to ensure that members of the public—and that includes the police—are not allowed into the public meeting at all. As some of us know, that public meeting is used for the most vicious racial purposes that can ever be imagined by Members of your Lordships' House and in a way that is completely contrary to the tradition of the British people.
Then I come to the question of how one deals with that situation. I should have thought that in this Bill we could define a public meeting as being one in which a certain proportion of the unoccupied seats must be available for members of the public, provided of course that anyone deliberately attending the meeting to try to break it up can be excluded, thus providing protection for those conducting the meeting.
The last point that I make on the omissions from the Bill concerns the wretched question of the demonstrations and marches which are also used by the National Front in order to terrify minorities in various parts of our country and to inflame others with racial prejudice. Whether something can be done about this under the Bill or whether the Government intend to deal with the matter under the public order legislation which I know is under consideration, the noble Lord the Minister will be able to tell us.
I apologise for having taken up more than the time to which I rationed myself. However, I can say in one sentence that this is a Bill which at present has imperfections; perhaps I may be allowed to say without disrespect that it was very sensibly revised by another place after a great deal of discussion, which could have been avoided if only the proper constitutional traditions had been observed.

British National Oil Corporation
3.45 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Avon): My Lords, with the leave of the House, I shall now repeat a Statement being made in the other place by my right honourable friend the Minister of State for Energy on the subject of the British National Oil Corporation. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement about the British National Oil Corporation. I hope it is for the convenience of the House that I should make this Statement now in view of the debate arranged for tomorrow.
"In the summer of last year the Government reviewed the institutional arrangements and

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operations of BNOC. They then concluded that the balance of advantage lay in retaining the corporation in its present form, given the contribution it was able to make to deriving full benefit from our oil resources.
"Since then the environment in which BNOC has to operate has undergone important changes. BNOC has traditionally operated by purchasing and selling oil under term contracts at prices fixed for a period of months ahead. Its purchases under participation contracts have been in this form which, as I explained to the Select Committee on Energy, has enabled BNOC to make a contribution to stability of markets in the short-term.
"There has however now been a major change in the structure of the oil market away from term contracts and towards spot and similar short-term transactions. This trend is unlikely to be reversed in the near future.
"In these circumstances BNOC could avoid the risk of losses only by linking its prices for participation oil closely and continuously to movements in the spot market. Such a system would mean that BNOC could no longer contribute to stability in the market. The Government have concluded that this shifts the balance of advantage decisively against the retention of BNOC in its present form. I see no advantage in retaining a public sector body to operate on that basis.
"The change in market structure I have described has led me to the conclusion that BNOC should no longer purchase oil by exercising its options under participation agreements. Dealing in participation oil has been the dominant part of BNOC's activities.
"The Government consider it essential to retain powers that would enhance security of supply if that proved to be necessary. We will therefore retain the participation agreements themselves so that we can activate them to have access to these oil supplies should the need arise.
"We will also retain the arrangements under which we have the power to receive oil from Continental Shelf licensees as royalty in kind. These two factors together mean that security of supply will continue to be safeguarded.
"I see a need in present circumstances to retain one other function of BNOC; namely, the management as agent for the Government of the Government oil pipeline system. This system is important for both defence and civil purposes.
"The retention of these three functions—custody of the participation agreements, disposal of oil received as royalty in kind and management of the Government pipeline system—requires the establishment of a small Government oil and pipelines agency as a successor body to BNOC. The abolition of BNOC and the establishment of the agency for the purposes I have described will require legislation and I intend to introduce this in the present Session of Parliament.
"Finally, I wish to express the Government's thanks for the valuable work carried out by the chairman, board and staff of BNOC."
My Lords, that concludes the Statement.
3.50 p.m.
Lord Stoddart of Swindon: My Lords, I should like to thank the noble Earl for repeating the Statement made in another place. May I say to him that I, and indeed my colleagues, are profoundly shocked by this utterly disgraceful Statement? On 18th December the Minister spoke in the House of Commons on the important and vital role of BNOC in securing and controlling the nation's oil supplies, yet a few weeks later the same Minister comes forward in the House of Commons and announces the abolition of the BNOC which he praised so highly in December.
The notion that the Department of Energy, even through an agency, can exercise participation agreements and be involved in the complex problems of buying and selling oil, is incredible. In fact it is yet another example of this Government's centralist, corporatist attitude. I thought that Stalin was dead, but he seems in fact to have been revived, resuscitated, and brought back to life by this Government.
How many people of experience and professionalism in oil trading has the Department of Energy—that is, compared with Mr. Grossart and his expert BNOC team? I should like the Minister to tell me that. Would not the department in fact be better employed in properly and more efficiently discharging the existing duties rather than taking on even more?
The single, lame excuse for abolishing BNOC is that it could no longer contribute to the stability of oil prices. Does the noble Earl not understand that that was never the corporation's original purpose? It is only the deliberate intervention of Government in the last few months which has caused BNOC's problems, as in fact the Select Committee on Energy noted in its fifth report, published last Monday.
Did not the Minister of State himself recently review the role of BNOC and totally reaffirm the vital part it can play in the management of our oil affairs? Furthermore, has the noble Earl noted that the Select Committee on Energy in its fifth report did not even consider the abolition of BNOC as a possible option? Have not the Government, by this announcement, kicked the Select Committee firmly in the teeth and rendered the massive work it has done on this issue completely useless?
May I ask the noble Earl what arrangements will be made to ensure that Parliament and the public are kept informed of the Department of Energy's operations in the oil market, particularly in respect of relationships with OPEC and the cost to the taxpayer of market interventions? We have heard that the Prime Minister's Private Policy Unit has been further reviewing BNOC's role. Is it not now absolutely clear that on a major aspect of energy policy the Department of Energy is being taken over by the Prime Minister's policy unit? Given the very personal involvement of the Minister of State in supporting BNOC, will the noble Earl recommend that he should now resign?
This announcement is the final act of vandalism which began with the dismantling and breaking up of the successful and profitable British National Oil Corporation under the Oil and Gas (Enterprise) Act. The national corporation belonged to the nation. It was the only corporation which had 100 per cent.

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loyalty to this nation. I assure the noble Earl that the Labour Party will oppose this legislation tooth and nail. We commit ourselves now to re-establishing a national oil corporation which will safeguard and develop our precious oil resources for the benefit of the nation and the British people.
Lord Taylor of Gryfe: My Lords, I understand the logic behind the Statement made by the Minister this afternoon. It is obvious that if you guarantee a certain uptake to the oil companies at a certain fixed price as part of the participation agreement and the market weakens against you the taxpayer is bound to incur substantial losses. Indeed, the Select Committee in the House of Commons reviewing this matter only last week reported that current losses for BNOC amounted to £61 million last year, and that a continued weekly deficit has continued to operate.
I have no doubt that the Minister will defend the Statement he has just made this afternoon on the grounds that covering the loss of £61 million plus current daily losses by buying oil at guaranteed prices and selling it on a very weak spot market incurs further liabilities to the taxpayer. But I wonder whether the Minister would tell the House what will be the net revenue losses to the taxpayer as a result of this exercise?
If Exxon or other of the oil companies sell at an appreciated price rather than the guaranteed price, they make a profit, but these profits are taxed to the extent of 80 per cent. and presumably the taxpayer gets back a substantial part of the profit that has been made. If you abolish the BNOC purchasing power then it means that the price of oil falls, the net revenue to the taxpayer arising from PRT is consequently depleted, and in fact the net advantage from this exercise is not as substantial as is claimed in the Select Committee report. Perhaps the Minister will enlighten us as to what is the net revenue impact of these changes.
Perhaps too he will answer the question put so forcefully from the Labour Benches as to why the Minister, only a few weeks ago, giving evidence to the Select Committee, defended the continued existence of BNOC, whereas today he announces that BNOC, under his auspices, is to be abolished. Perhaps he will also tell us a little about the consequences of this for the small companies operating in the North Sea. The large companies can offset the loss from a reduction in price against their downstream and refinery activities, but the small companies have no such activities and depend on the guaranteed offtake price, which BNOC presently guarantees. Under the circumstances, can the Minister make some estimate of what the consequences of this policy may be for the smaller operators—not the Exxons and the Texacos but the smaller operators, who are very lively and who have invested large sums in North Sea development?
As I say, I accept the logic of what the Minister is saying and I accept that the market is bound to be a soft market for the foreseeable future. We are moving into summer, the miners' strike has been settled, and presumably the consumption of oil in world markets will be reduced, and I can understand why he is taking these measures. But I hope that he will deal with these
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consequences and say whether he anticipates that there will be any effect on future exploitation and exploration policy as a result of the removal of this guaranteed price for 51 per cent. of the output.
I accept the Minister's statement that the old argument about security of supplies no longer exists, and that that was the original justification for BNOC, because the pipeline has come ashore anyway, and I am delighted that, while he is not exercising the powers involved in the participation agreements, he is in fact retaining the power to exercise these if the market rises or if we are in any danger.
Perhaps I may join with the Minister in paying a compliment to Ian Grossart and the staff of BNOC, who have discharged this difficult responsibility well. Perhaps the great mistake was in splitting the marketing activities of the oil operation in Britain from its exploration and exploitation activities, which are now vested in Britoil. But that is past, and I am delighted that certain powers involved in this operation are going to be retained to be used when necessary.
4 p.m.
The Earl of Avon: My Lords, I am grateful to the noble Lord, Lord Taylor, for his reception of this Statement. I am rather astonished by the reactions of the noble Lord, Lord Stoddart. I am particularly astonished that there should be any question of Stalin or anybody being chained up. I thought that what we were doing was easing the chains. I find it extraordinary that he should have such a reaction about something which saves the public an unnecessary expense, which is why we have moved swiftly to save them from a corporation which is no longer required.
The Government have been consistent in their policy of seeking to avoid action which could risk destabilising the oil market. They share this objective with their Western allies. They would gain no advantage from a violent fall in oil prices, which might be followed by an even greater surge in prices. Because of changes in the oil market structure, BNOC could no longer make a contribution to stability, but the terms under which it acquires participation oil developed a strong potential for destabilising the market. The policy is that prices should be determined by the balance of supply and demand and that Her Majesty's Government should seek to avoid actions which could risk destabilising the market. With a change in the structure of the oil market, the BNOC price had gained a potential for destabilising the market. The only way to achieve the Government's policy is abolition of that price and the supply arrangements which made it necessary.
The noble Lord, Lord Stoddart, mentioned the Select Committee's report on oil pricing. I am rather surprised that he used that in support of his arguments, because I should have thought that the result was about two-thirds of the way towards what the Government have done today. The noble Lord, Lord Taylor, asked particularly about tax revenue. Tax valuation will continue to be based on the market price, and this would not be affected by abolition of BNOC. I am also told that there would be no effect on small companies.
The Earl of Lauderdale: My Lords, is my noble friend aware that there is much sympathy for the Government in facing the dilemma that BNOC was set up at a time of rising prices and we are now in a period of falling prices? But in recognising that, is the Minister quite sure that he has read his brief correctly when he says that BNOC is no longer able to contribute to market stability? Surely the fact is that, trading about 1.3 million barrels of oil a day out of the total free world market of 45 million barrels a day, of which half is on the spot market, considerable influence at the margin is exerted by BNOC. So to withdraw the use of that instrument will surely be to encourage instability of prices rather than the opposite. Can the Minister say whether the Government have been able to discuss this problem with the industry, notably the United Kingdom Offshore Operators' Association? Is he not aware that some oil companies, notably BP, have been arguing that we should keep BNOC but that its trading and price fixing methods should be more flexible?
The Earl of Avon: My Lords, my understanding of my noble friend's question was to ask me why we were doing this, and the answer, I thought, is basically in the different operation of the market. There is now so much oil being dealt with at spot prices that the question no longer arises. Do I hear my noble friend say that that is not true?
The Earl of Lauderdale: My Lords, what I wanted to say is that it is the case that about half the 45 million barrels of oil traded in the free world each day is now traded on the spot market and not by long-term contract. While half of the free world's 45 million barrels a day is traded at contract prices, the half that is traded on the spot market is an area in which the 1·3 million barrels a day handled by BNOC can have an effect and has been having an effect.
The Earl of Avon: My Lords, I am grateful to my noble friend for his clarification. Concerning his question on consultation, no, we did not.
Lord Taylor of Gryfe: My Lords, I wonder whether I have misunderstood the Minister, and perhaps he could clarify this. I assume it is correct that tax revenues will not be affected, and that the overall rate of tax will not be affected, by these decisions. But if the off take price of oil is reduced by the major oil companies, thereby reducing their revenues, then presumably the taxation revenues will be consequently reduced. I am asking: what is the net effect of these measures on our total revenues? I presume we shall save £60 million on the abolition of BNOC—that is the figure for last year—but what will be the consequence of this on the taxation revenues which result from a reduction in the offtake price, which is inevitable? What is the net advantage to the nation?
The Earl of Avon: My Lords, I cannot honestly say that I have the answer to that question today. I hope that I can find it for the noble Lord and write to him. The one figure I do know is that we shall receive back three-quarters of the cost of BNOC as a result of tax.
The Earl of Lauderdale: My Lords, will my noble friend add just one piece of information? When the
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legislation comes, is it not only to keep BNOC in being but to keep in reserve the same powers for the compulsory buying of oil to steady the price if we reach a period, which many oil companies think will be coming in four or five years, where we have rising prices again?
The Earl of Avon: Yes, my Lords. The original Statement says that we shall retain the participation agreements themselves so that we can activate them to have access to these oil supplies should the need arise.
Lord Cledwyn of Penrhos: My Lords, is the noble Earl aware that the case he has sought to make and the Statement itself give the House no confidence that the Government are doing a prudent thing in abolishing BNOC at this time? Is he further aware that the reaction to this in the markets will tend to destabilise rather than to stabilise the position? Can he say briefly what consultations the Government had before they came to this serious conclusion? In a whole catalogue of divisive legislation this has been the most divisive.
The Minister has the obligation to tell the House that in addition to interdepartmental discussions there were cogent and clear discussions with the other parties involved. Can he say what discussions have taken place with the oil companies in this country; will he say what discussions have taken place with the trade unions: and. finally, can he say whether there were discussions with the chairman and members of BNOC, who have rendered signal service to this country during the existence of BNOC? The Minister's duty at this moment is to explain to us what consultations took place.
The Earl of Avon: My Lords, I am astonished that the noble Lord should speak in these terms on a measure which I find to be totally explicable. No consultations have taken place because of the risk of speculation about the changes in the oil market. The chairman of BNOC was asked to come in this morning, and he was told of the decision.
Lord Cledwyn of Penrhos: My Lords, It is absolutely disgraceful that the distinguished chairman should be called in and presented with a fait accompli without being given the opportunity to state a case. Can the noble Earl tell the House now what were the reactions of the chairman when he was told in this fashion?
The Earl of Avon: My Lords, I am informed that his reactions were what any good civil servant's reactions would be.
Lord Diamond: My Lords, I am delighted that the noble Earl finds the situation "totally explicable". He will forgive me, however, for reminding him that one question has been asked twice and not answered. We are all very interested in it, and may I put it. therefore, a third time? Those of us who listen carefully to what the Government have to say recollect that three weeks ago the Government, through their official spokesman the Minister in question, said the very opposite to what is now being stated. It is a simple question. May we have the answer?
The Earl of Avon: My Lords, I did not get the noble Lord's supplementary question. Is the noble Lord asking why my right honourable friend changed his mind over the space of three weeks?
Lord Diamond: Yes, my Lords.
The Earl of Avon: My Lords, the answer is that the situation has changed in the oil market structure. BNOC can no longer make a contribution to stability; the terms under which it acquires participation oil have developed a strong potential for destabilising the market.
Lord Davies of Leek: My Lords, my question to the noble Earl the Minister, while thanking him for the Statement, was to ask whether he is not faced with a fait accompli like the rest of us. This matter is of such devastating importance to me that I think it is worthy of time being allowed for the House to debate it fully and to go into it in depth and with understanding. That is not casting any aspersions on the Minister. I thank him for the answers that he has given us.
The Earl of Avon: My Lords, I thank the noble Lord for his appreciation that I am doing my best. I will certainly go through the normal channels to see what can be done.
Lord Stoddart of Swindon: My Lords, in his reply to me the noble Earl suggested that the report of the Select Committee went two-thirds of the way towards supporting the abolition of BNOC. I really would ask him to reflect on that. Is it not a fact that the Select Committee did not consider abolition as an option? From paragraphs 27 and 28 of the report it is quite clear that the Select Committee had no idea that BNOC should be abolished. Indeed, the only criticism they make—and they make no criticism, as far as I can see, of BNOC—is criticism of the Government's interference with BNOC which has made it difficult for it to carry out its task. Would the Minister kindly comment on that?
The Earl of Avon: My Lords, as I understand it, the Select Committee considers that BNOC should move to setting term prices for shorter periods and in more direct relationship with market values, in preference to the alternative of strengthening BNOC's ability to stabilise the short-term market by allowing it to invest in storage and intervene more actively in the forward market. I hope that the noble Lord and I will be able to discuss this again at some later date.
Lord Shinwell: My Lords, while I do not complain about the Minister's clarity, for clarity is one of his attributes, I find it difficult to follow all this. For quite a long time we have been exercising our pride, if we have any pride left in matters of this sort, because we control oil, North Sea oil—and that is the language we use: "North Sea oil"—and the revenues from North Sea oil. Is the Minister going to derive any revenue from North Sea oil in the future? If so, could he exercise his mind on the issue? He spoke about something associated with new technique but there is no clear concept about whether the revenues would be continued. If they are to be continued, will they he used by the Government as before?
The Earl of Avon: My Lords, I would underline everything that the noble Lord, Lord Shinwell, has said. Indeed, we have got an enormous pride in what is going on in the North Sea and that pride will in no way be abashed by this particular measure. The noble Lord might like to know that the North Sea oil production which we are getting at the moment represents 5 per cent. of the oil production of the world. Therefore, on the taxation situation, as I mentioned to the noble Lord, Lord Taylor, we can have another look at this shortly.
Lord Morris: My Lords, may I ask my noble friend the Minister the nature of the change in circumstances to which he referred when answering an earlier supplementary?
The Earl of Avon: My Lords, without having a look at Hansard I am afraid, since I have been on my feet for such a long time, that I cannot remember.

Representation of the People Bill
4.15 p.m.
Second Reading debate resumed.
Lord Tordoff: My Lords, if noble Lords have finished pouring trouble on oily waters, perhaps we can continue with the Representation of the People Bill. My Lords, like the noble Lord, Lord Mishcon, I was somewhat surprised at the terms in which the noble Lord, Lord Elton, presented this Bill to us. The peace and light which apparently had reigned in the other place did not sound like that from my reading of the Second Reading debate there or even from certain exchanges at the Committee stage; although I would accept that by the time the other place came to the end either they were exhausted or they had given up any hope of persuading the Government to make any further modifications and they therefore gave the Bill a very calm Third Reading. I was a little surprised also at the terms in which the noble Lord described the Bill when he said it was an important reform of franchise. Anybody who has been listening to this debate today will not, I think, go away with the feeling that they have been listening to the great reform Bill of 1985. I do not think that it quite comes into the category of some of the Bills of a century ago.
Nevertheless, it is a welcome Bill. The minor amendments that are made to the electoral laws are important and there are some important extensions of the franchise. It does not, however, make any vast extension of the ability of the people to be represented and the electoral system as we have it still does peculiar things for minorities.
It will not surprise your Lordships that I am going to spend a minute or two on the subject of proportional representation, but I can assure the House that it is to be only for a minute or two; and that when I mention the serious effect on minorities I am not, of course, referring to the effect on the Social Democrats and the Liberal Party and the Alliance. I am talking of the curious effect it has on the minority which represents the Government; because, of course, the Government are a minority party just as we all are minority parties today. It simply happens that they have a lot more

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seats in another place on the basis of their minority representation. They are seriously over-represented and we are seriously under-represented. One of these days there will be a new Reform Bill, put in by an Alliance Government, under which proportional representation is included.
I was interested to hear what the noble Lord, Lord Mishcon, said about the subject of uniformity. The sort of uniformity that we should like to see from these Benches is the uniformity of equal votes of equal value, if I may put it that way—having said which, I do not propose to say anything more on proportional representation either at this stage or at any subsequent stage of this Bill.
We certainly welcome in Clause 1, the votes for British citizens abroad, but we feel that the five-year period is far too short. We realise that this was (dare I say?) the carve-up between the two Front Benches in another place, but I hope that later in the stages of this Bill we can come back to further discussion of this matter because it will certainly be my intention to put down amendments to try to extend that period beyond five years.
I really cannot go along with some of the remarks of the noble Lord, Lord Mishcon, on people who reside overseas. They are not all tax exiles—I know that he did not say that they all were—and neither are they all inhabitants of the "Costa del Crime", and I know that he did not say that they were; but it seems to me that he gave those people undue representation in his remarks. I thought that the intervention of the noble Baroness, Lady Elles, really touched on the point. We do not actually differentiate between those people who are paying taxes and those people who are dodging taxes when it comes to a question of whether or not they should have a vote, however despicable it may be to move your residence abroad to avoid tax.
The noble Lord, Lord Mishcon, seemed to introduce a new concept into the category of people who are entitled to vote. That was the category of usefulness. I think that that leads us down a very difficult path and one that should be avoided at all costs. Certainly many of these people are making a useful contribution to the life of this nation and to the future wealth of this nation. And not only that, but they are making a useful contribution to the wealth of the world at large. My honourable friend the Member for Berwick-upon-Tweed referred to this in another place when he spoke about the work that missionaries were doing overseas.
There are people who clearly have every intention of returning to this country on retirement, but they may spend most of their lives abroad. They are precisely the people who cannot afford to keep a residence in this country and who therefore would be disqualified under the terms of this Bill after the five-year period. I think we ought to take that into consideration because they are the kind of people who are interested in what is happening in politics in this country, whether they be matters concerning citizenship, economics, pension rights, foreign affairs, defence, or even something as simple as the BBC's overseas service, about which they probably know more than most people in this country. They may also be interested in matters of trade policy. They would
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retain an interest and would surely wish to participate in the democratic processes of this country, on the understanding that it is their intention to return.
There are, as we see, provisions in the Bill whereby people should make such a declaration. I suspect that tax exiles or people such as the gentleman referred to by the noble Lord, Lord Mishcon, and his right honourable friend in another place, who are at present residing in Spanish sun, would be unlikely to sign such a declaration.
It seems to me that at the end of the day the crucial question is whether you are a citizen of this country. I must say I am surprised that the Labour Party, which spent so much time defending the kind of people I am talking about when we were debating the nationality Bill, should so lightly abandon them when it comes to the question of their ability to vote. So I think that their ultimate test should be that British citizens abroad should have the right to vote, and I regret that this Bill does not go far enough down that line.
We certainly welcome the extension of postal voting, particularly as regards parish councils, as the noble Lord, Lord Mishcon, has suggested. Again, to a certain degree at the behest of my honourable friend the Liberal Chief Whip in another place—this is not a Chief Whips' appreciation society; it just happens that this is a subject with which Chief Whips tend to get landed—I think the extension to parish councils is valuable. Often parish council and district council elections occur on the same day and it has been rather foolish to be able to have a postal vote for a district council election but not for a parish council election held on the same day.
There are two provisos that I wish to make about postal ballots. The first is that, of course, they are less secret; and that is something that I believe we should bear in mind. I suspect we all know of cases where elderly people are assisted to fill in their ballot papers for postal votes by members of one political party or another. However improper that may be, it does happen, and I merely make the point that we should remember that these ballots are less secret and therefore there is perhaps some justification for what has happened in the Northern Ireland situation. It is much less easy to police a postal ballot than it is to police a ballot box in a polling station.
The other matter is that the extension of postal voting should not be allowed to extend the effect of multiple registration. One of the questions to which we on these Benches will return at later stages is that of multiple registration, because we believe that it is an abuse that people can register in more than one place and then can decide, because of geographical or geopolitical considerations, where they are going to exercise their vote. Where people vote in holiday areas in order, as it were, to achieve better value from their vote because there is a better chance of their candidate getting in there than is the case with the candidate at the place of their main residence, that seems to us to be a wrong way of dealing with the situation. Certainly we shall seek to remove from the Bill the opportunity for multiple registration.
When it comes to EEC regulations, it is our belief that EEC citizens should be allowed to vote in the countries in which they reside; in other words, citizens of the EEC living and working in Belgium ought to be

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able to vote in the Belgian part of the European party elections. We are some way away from that, but I believe that it is the direction in which we ought to be going.
As regards deposits, we certainly welcome that reduction to 5 per cent. I must say I was slightly surprised that when the noble Lord said that this reduction would be of help to minor parties he looked in our direction. I have to tell him that this provision would have saved the Labour Party an awful lot more money at the last election than it would have saved us—to the tune, as I see it, of about £14,000. The 12½ per cent. was always, of course, a very silly figure. Candidates who got that number of votes in a constituency were clearly serious candidates, and where candidates lost a deposit after polling many thousands of votes that was always an anomaly.
The whole matter of deposits was introduced at the end of the First World War in order to stop supposedly frivolous candidates trying to get out of the Army rather sooner than they otherwise would have done; and I think that is why the hurdle was then set at rather a high level and has not been changed since. However, we still believe that the deposit system is the wrong one and. like the noble Lord, Lord Mishcon, we would much rather see a system of nominations. The 5 per cent. rule penalises some quite serious political candidates. The Ecology Party and the, dare I say it, Wessex Regionalists, who have written to me and have no doubt also written to other noble Lords, have a serious political point of view to make. These people are to be distinguished from the really very silly candidates who turn up at by-elections. I would not grace them by naming them in your Lordships' House, but we all know that there are poseurs who come along, or there are some people from the entertainment world who use the poll as a form of advertising.
Of course they will still be able to afford to do this. The fact that it will possibly cost them £500 is of no consequence to them. The fact that they have to pay £5,000 would probably be of little consequence to them; they would simply charge it against their professional expenses and treat it as a piece of publicity.
So I do not believe that the deposit system actually stops the very people whom the Government are anxious to stop. Indeed, I am not at all sure that it is very sensible to stop these people, anyway, since on occasions they add a certain amount of fun to by-elections and perhaps stop us from taking ourselves too seriously at times. The better test is, of course, to have an increase in the number of nominations, and again I hope that we can test this point at greater length during the Committee stage of the Bill.
There are just a couple of minor points I should like to make. First, on the question of expense, I think that changes in the provisions there are sensible. I also think it is time that we started to look at the control of national expenditure on elections, because it seems to me that we keep a very tight rein on expenditure at constituency level but that there is virtually no control over the amount of expenditure at national level. Since television, broadcasting and so on play such a large part in our elections these days, I think that in the interests of democracy we must look at this very closely and see whether there is not a national limit on
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expenditure that ought to be Considered for parliamentary elections.
The other point that comes into this same area is that we believe that challenges in the courts over election expenses and the like should not be left to individual petitioners but should be followed up through criminal proceedings in which the DPP plays a part. Noble Lords no doubt will be aware of a case not a thousand miles away from here where election petitions were brought in regard to a large number of supposed offences. One minor technical offence was found to have been committed, and the candidate was faced with a very large sum of expenses and court costs amounting to many tens of thousands of pounds. That seems to us to be a somewhat whimsical way of dealing with what is certainly a serious problem. One does not want to allow corruption in electoral practices, but it seems to me that it is best left to the criminal law and to the DPP to decide whether or not prosecutions should be brought.
Arising out of what the noble Lord, Lord Mishcon, said about the National Front, I well understand and support his views about the National Front. No one has a greater hatred of that sort of racialism than I and my noble friends here. However, I certainly would not stop these people having halls. I believe that if there is a candidate he has a right to have a public hall. But the noble Lord came at it in a slightly different way from the ways that I have heard before, and what he said bears serious consideration. If they are going to use public halls, then they should use them in the proper way and any hint of racialism should immediately be stamped on by the due process of law.
Similarly, I do not believe that provocative marches are to be tolerated, but I do not think they come within the terms of this Bill and they ought to be dealt with in other ways. It is a difficult problem to stop people having the right to march on political matters, whether they be on the extreme Left or on the extreme Right. But in many cases, a march is clearly a serious provocation and a threat to public order, and it should be dealt with as such, and not within the terms of the Representation of the People Bill.
This is a useful Bill, but it is not a great Bill. We broadly go along with the provisions of the Bill, but will certainly seek to make some changes to it, as I have indicated today.
4.32 p.m.
Lord Allen of Abbeydale: My Lords, much of what is in this Bill is of considerable interest to me, in view of my past experience, but this afternoon I wish to raise only one issue and that is one which is of concern to me in my current capacity as chairman of MENCAP. This point, which has already been clearly explained by the noble Lord, Lord Mishcon, relates to the voting rights of long-stay voluntary patients in mental illness and mental handicap hospitals. Noble Lords will look in vain among the long list of miscellaneous provisions in the Bill for anything on this point. There is nothing there and it is my contention that there ought to be something there. If this opportunity is missed, there is no saying when another one might arise.

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It is a problem which has been very fully discussed before and I certainly do not propose to weary your Lordships with a detailed historical review. Rather, I take as my starting point the present provisions to be found in Section 7 of the Representation of the People Act 1983, which re-enacted provisions made in the Mental Health (Amendment) Act in the previous year. I should say that I am not unmindful of the improvements which were effected by those provisions, compared with what had previously held the field. Putting it as briefly as I can, Section 7 now provides that a voluntary patient in a mental illness or mental handicap hospital is entitled to be registered to vote, provided that he can pass, as it were, a test of capacity each year by completing the declaration for which the section provides and getting it attested by an authorised member of the hospital staff.
The difficulty is that he can be registered only if in the declaration he can give an address where he,
"would be resident in the United Kingdom—
and I am quoting the words of the Act —
"if he were not a voluntary mental patient or. if he cannot give any such address, an address (other than a mental hospital) at which he has resided in the United Kingdom."
These words have the slightly odd result that an individual who can be registered can normally be registered in any constituency except the one where he happens to be residing at the time.
But the real trouble is the words "other than a mental hospital". The inclusion of those words in the subsection means that if the hospital is the individual's sole address, even if he has lived there for years and it is in any ordinary sense his permanent address, he is ruled out for registration. This is an anomaly which I should very much like to see removed. It was at an earlier stage suggested that if a change of this kind were made, there would be a risk of the electoral roll in a particular constituency being swamped by the addition of vast numbers of patients in a hospital there. But it is a little difficult now to take that argument too seriously when, for one thing, there is a well advanced programme for reducing the numbers in the hospitals and putting them back into the community, whatever views "Panorama" may have about that programme, and when the numbers of those who have taken advantage of the concessions in the 1983 Act, and who have been able if they wish to make the necessary declarations, have not been all that great.
What I am recommending is, after all, what the Speaker's Conference in 1973–74 thought appropriate. It was their wish that someone whose only residence was a hospital should be entitled to call that hospital his residence. I am very conscious of the fact, too, that those in the psychiatric wing of an ordinary hospital are not barred from registration. What we are currently doing therefore, it seems to me, is to continue to disfranchise a number of people who are perfectly able to exercise their vote intelligently and responsibly, and who differ in no way from considerable numbers of mentally handicapped or mentally ill people in the community or in other institutions who can be registered. I cannot persuade myself that that is a sensible or indeed a humane thing to do.
4.37 p.m
Baroness Elles: My Lords, I have listened to the noble Lord, Lord Allen of Abbeydale, with the greatest attention, but he will, of course, understand that I shall not be following him in the point that he has been making. As president of the British Conservative Association in France, and having met, listened to and received correspondence from hundreds of British citizens working abroad for this country, I should like in particular to address myself to the problem of the right to vote of citizens who live abroad.
Of course, I welcome very warmly the fact that the Government have accepted the principle of British citizens being given the right to vote, even if they are not resident in this country on the qualifying date. I also welcome these faltering footsteps going in the direction of following the United States, France, Italy and other democracies, who for many years have given the right to vote to their citizens wherever they may live, whether in the country of nationality or outside it. In particular, France, which has a system for the time being based on constituencies, is very little different from our own, so the excuse that is sometimes given by the Government that it is more difficult because we have constituencies has been overcome so far as France is concerned.
But almost immediately, having established the principle, my right honourable and learned friend when introducing this Bill in another place, said that there was a problem and that the extension of the right to vote had to have a restriction put upon it. As a result of the Bill going through another place, the restriction at the moment is that those who have lived abroad for longer than five years as from the qualifying date will again be deprived of the right to vote. I know from my contacts abroad, not only in the European Community, but in many other places as well, that many British citizens will feel frustrated, disappointed and rather embittered by the action of this Palace of Westminster, which is, after all, meant to be the seat of democracy and is held out as a shining example. Only the other day, when addressing a large audience in France I mentioned that I was returning to your Lordships' House to speak on this matter, and those people were simply amazed to learn that we do not have the vote when we go to live abroad.
I wonder whether your Lordships will place yourselves in the position of those British citizens who live abroad. Perhaps it is not fully recognised that British laws—and I use the term "British" in the general sense because I know laws can be English, Scottish or Northern Ireland laws—passed in the Palace of Westminster affect these people, whether those laws concern nationality, matrimonial or tax matters, or are laws relating to pensions, social security or education: and a vast number of British citizens abroad send their children to be educated in this country. British citizens living abroad have a direct interest in the results which come from this Palace of Westminster.
We should remember that the economic policies of this country, too, directly affect them. I must say to the noble Lord, Lord Mishcon, who is always extremely courteous and kind, how offended would be many of

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the people whom I meet abroad to hear themselves described as ex-patriots fleeing from these shores to avoid taxes; or, if I may say so, to be lumped in the same category as people who might be criminals escaping from this country. I must tell the noble Lord that I go abroad quite frequently, as I know he does, and I have yet to meet one of those particuliar characters. Perhaps the noble Lord meets them, but I have not done so.
Lord Mishcon: My Lords, the noble Baroness is extremely courteous in describing my friends and associates abroad. I should like to make it perfectly clear. as I hoped I made it clear in my speech, that I have nothing but admiration for those resident abroad because of ill-health—I did not earlier mention that category, but do so now—or those who serve this country in industry, commerce, and in every other way. There are the "other" people and those who, unfortunately, have to have knowledge of all our British subjects abroad know that they are a fairly sizeable category.
Baroness Elks: My Lords, I thank the noble Lord for that intervention. If we were to argue about statistics, we could go on for a long time and they would be impossible to prove. I imagine, as I have already indicated, that possibly those who vote in this country might also fall into some of the categories which the noble Lord has mentioned.
I remind your Lordships that we are a trading nation, and we send vast numbers of young people abroad. Many of them go not voluntarily but as employees of a business. Whether they are working in Swindon. Windsor, Birmingham, Bangkok or Singapore, they are working for British prosperity and in British jobs. The fact that they are employed by British companies, wherever they may work in the world, makes totally irrelevant their actual place of residence.
I was interested to read a speech made by Mr. David Royce of the Institute of Export, who said only the other day that it takes at least four to five years to establish a market abroad. We know the situation in Japan in particular, where we are trying to break into the market. One cannot expect employees or business personnel to go to such a country for fewer than five years. They not only have to establish their markets, but also have to develop them. Ten years is probably the minimum length of time required to do that. Yet these are the kind of people whom the Bill seeks to deprive of the right to vote.
We talk about tenuous links. It is said that those who have lived outside the United Kingdom for five years and one day since the qualifying date will be deprived of their vote, whereas those who have lived abroad for five years minus one day, according to the date of any election which might be called, will be able to vote. It is incredible to think that one can be chopped off at five years from the country where one has been born and bred, and where one's relations live, and which one visits from time to time.
I sometimes wonder about the beleaguered mentality of the Opposition, who seem to be living in the age of the schooner rather than in the twentieth
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century and the age of the airplane; to say nothing of the twenty-first century from which we are only about three general elections away. Practically every British person I meet abroad returns to this country at least every year or every two years to visit their family, to deal with their business interests, to keep up the education of their children, or for other reasons. The vast majority of them have their links firmly in this country. Now there is a clause in the Bill which requires them to declare an intention to return to this country. I should have thought that was sufficient reason to remove the five-year limit.
I hope that my next point will be seen in the right context and within the framework of the argument I am using. Surely someone who has been born and bred here and who has to go abroad in order to keep his job and to work for his company has as much right as a British Commonwealth citizen, who perhaps does not even know English, who gains the right to vote within six months of having put his or her name on an electoral roll; or a citizen from the Republic of Ireland who may come over on 9th October, put down his name on 10th October, and within six months have the right to vote in a general election. I do not question such rights because such is the law of the land and I accept it. But surely their links are no less tenuous than those of the people to whom I have referrred.
I now turn to the question of elections to the European Parliament. I was somewhat concerned by a statement made by the Home Secretary in his Second Reading speech when he said,
"further primary legislation on European elections only will probably be needed if agreement is reached in the Council".—[Official Report, Commons, 10/12/84; col. 756.]
There was no agreement reached in the Council before the last European elections in 1984. Consequently, this was the excuse given for there being no change in the rights of citizens abroad. I remind the House that the citizens of other member states were all given the right to vote wherever they were living within the Community, including Belgium and the Netherlands, who gave the right to British citizens living in their countries because they knew that those people were deprived of that right in respect of their own country.
I am reminded of the comment of the noble Lord, Lord Mishcon, when he said how ludicrous was the situation in the case of a person living in one bedroom in Northern Ireland and another person living in a bedroom in another part of the United Kingdom. One had the right to vote but the other did not have the right to vote. Without wishing to speak too much of my own family, I would say that my son and his wife share the same bedroom. My son, being a British subject, did not have the right to vote, but his wife, who is French, did. That is an example of the folly of the system that exists.
If the Council does not come to an agreement over a uniform electoral procedure for 1989, I am anxious that the Government should give an undertaking that they will at least consider introducing measures to give the right to vote to citizens who are within the European Community for European parliamentary elections. I draw the attention of the House to the fact that only two weeks ago in the Political Affairs Committee of the European Parliament in Brussels we

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adopted almost unanimously a provision concerning the right to vote. It states:
"Nationals of member states shall be entitled to vote in the country of which they are nationals. Member states shall take all necessary measures to enable their nationals where place of residence is outside their country of origin to exercise their electoral rights without hindrance in the member state of which they are nationals".
I hope that that will be taken on board by the Government and that they will at least consider introducing measures for 1989, regardless of whether or not there has been a change in the electoral system itself.
One more important point was raised by my noble friend. As the Bill stands, only those who left the United Kingdom after October 1983 will be able to vote in June 1989. That will exclude nearly all the 1,500 or more officials working in the European Community institutions; in fact, they will be the only people deprived of voting in both national and European parliamentary elections. Many of those officials have served in Government departments at home. Many of them hope eventually to return to this country. Indeed, all those I know either have homes to which they hope to retire or have children at school in this country, and they thus have very close and direct links with this country.
Surely it is myopic, if I am not being too aggressive to my noble friend the Minister, that the Government should seek to deprive these people of the right to vote when they are the only officials in the Community institutions who do not have the right to vote; yet they are expected to work loyally and to support British interests whenever they can and on every conceivable occasion. It seems to be an extraordinary attitude and I hope that, with assistance from noble Lords, we shall possibly be able at least to amend the Bill in that direction.
It was clear from debates in another place—I know the noble Lord on the Front Bench opposite had a slight difference of colour, if I may say, with the opinion of my noble friend the Minister—that at the end of the day, whatever else, there was a certain element of consensus; or at least the Bill was changed in order to get it through another place. However, I remind my noble friend the Minister that every Government, regardless of colour, has an overriding duty to protect the fundamental rights of all its citizens, wherever they may be. One of those fundamental rights in a democracy is surely the right to take part in elections. I feel that this Bill has not shown that the Government have fulfilled that overriding duty. I hope that in this House we shall be able to contribute to seeing what can be done to make the Bill closer to what we regard as the protection of the fundamental rights of our citizens, wherever they may live.
Lord Morris: My Lords, before my noble friend sits down, is she aware—and I am sure she is—that I, too, share a bedroom with my wife while I am disenfranchised but she is not?
4.52 p.m.
Lord Elton: My Lords, this is a major Bill on the representation of the people, in spite of what the noble Lord, Lord Tordoff, has said to reduce your Lordships'
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regard for it. It makes a number of significant changes in electoral law and there have been only four such Bills this century which have made changes of this order. These were in 1918, 1928, 1948 and 1969.
We have done our best to accommodate different points of view in areas where all-party support is not always possible. I think it is a sign of our success that there is such a short list of speakers this afternoon and that, whatever the temperature, tempo, length, volume or acerbity of exchanges in the other place in the earlier stages, the Bill proceeded from that House with no Division on Third Reading. I shall try to use this opportunity to comment on the positions which your Lordships have staked out for yourselves for the Committee stage.
I first correct, with all deference, the noble Lord, Lord Mishcon, in what I think may be a misunderstanding of how the Bill will work in regard to absent voters in Northern Ireland. Northern Ireland holidaymakers can vote by post or proxy on the same basis as those from Great Britain, subject to the reserve power in Clause 10. That applies exclusively to postal voters and, as the overseas vote is by proxy, it will not be affected; and that is a matter of interest to the person delivering the croissant and café to the adjacent rooms in the French hotel which we were asked to consider, because the post will be the same in each case.
The noble Lord also referred, as did others, to election meetings. We accept that there is a problem, but there is a substantial problem also as regards enforcement, both with the present law and with proposals for change so far advocated. At present we do not have a workable solution to the difficulty of the unpleasant meeting to which the noble Lord referred. As to demonstrations and marches, that is, as he suggested, a matter for the public order review to which he referred.
The noble Lord felt rather strongly that we had done too little by way of preparation for the passage of this Bill. He suggested that we should have used what I think he said was the normal procedure of a Speaker's Conference and that there should have been wider consultations. I understand that it is now generally agreed that Speaker's Conferences are not a satisfactory way of suggesting changes in electoral law. The noble Lord may recall that the Labour Government's 1969 Act failed to implement the most important recommendations of the Speaker's Conference which preceded that Act and neither this Government nor the previous Labour Government were able to implement any of the recommendations of the Speaker's Conference of 1973–74. Experience, therefore, suggests that that method of progress is not fruitful.
We did, however, write to all the Opposition parties in November 1983, seeking their views on the Select Committee's report. The replies were taken into account in the White Paper. There were then detailed consultations with the parties and local authority associations at official level before the Bill was introduced. Further discussion took place across the Floor of another place and doubtless will continue.
Lord Tordoff: My Lords, will the noble Lord give way? I should be glad if he will clarify this point. I

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thought I read in the debates of another place that the Scottish National Party and Plaid Cymru had not been consulted on these matters. That may not be true but some sort of assertion of that nature was made in debates in another place.
Lord Mishcon: My Lords, perhaps I may be allowed to ask the noble Lord the Minister to answer two noble Lords on one matter. It was also stated in another place at Second Reading, by a responsible spokesman, that there was consultation with the official Opposition on only one minor matter relating to this series of electoral reforms.
Lord Elton: My Lords, I can give only the briefest answer to those two interventions. I understand that both the SNP and Plaid Cymru were consulted. I also understand that the consultations with the main Opposition party in another place, if I may so describe it, went beyond the very narrow point that the noble Lord, Lord Mishcon, suggests.
During the noble Lord's speech we had an interesting debate within a debate on who should be given what I call the overseas, or expatriate vote. His principal attack was directed at those whom we call tax exiles. With them he swept up those whom we call criminals. We shall no doubt return to the matter of definitions at a later stage. The other essential point he seems to have missed, or at least to have ignored, is the fact that the right to an overseas vote is a temporary right lasting only five years, which is a matter of understandable regret to my noble friend Lady Elles—a regret I share even with noble Lords in the Alliance. On the other hand, exile, whether in flight from taxes or the law, is a permanent condition. It was for this very reason that our own preference for a 10-year right was overturned in favour of a right for only five years and, therefore, most often for only one general election. Your Lordships will recall that that curtailment is backed up by the requirement inserted in the Bill, in Clause 2(3)(e), to make a declaration that the applicant does not intend to reside permanently abroad. It was specifically put into the Bill in another place to deal with the anxiety which the noble Lord has expressed. Therefore, although he may not be satisfied with the provision, it is there. I have said that we think the five-year rule is shorter than we should like it to be. The Government have made no—
Lord Harris of Greenwich: My Lords, if the noble Lord is saying that it is shorter than the Government would like it to be, is he indicating that the Government would be happy to accept an amendment in Committee?
Lord Elton: My Lords, I sought to make it clear in my speech introducing this Bill that on matters of the election of representatives to another place we have to proceed, as far as is possible, by agreement between the parties. What we have before us in the five-year rule is, in fact, such an agreement. It was arrived at by what I can only describe as retiring from the 10-year position, via the seven-year.
Lord Tordoff: My Lords, would it not be more correct to say that it was with the agreeement of some of the parties?
Lord Elton: My Lords, if we are to get into historical comparisons of detail we should reserve that for a later stage. Nonetheless, it is the position which we now occupy and which we are persuaded to occupy because it appears to represent the overwhelming balance of opinion in the political field in the elected House.
As I have been seeking on three occasions now to say, the Government have made no secret of the fact that this is a compromise. It is a compromise between those who would prefer a longer time limit, or indeed none at all, and those who are opposed in principle to any extension of the franchise to British citizens resident abroad. There is nothing shameful I think about the need to compromise. Major representation of the people legislation has always been brought forward on the basis of consultation and, where possible, agreement between the parties represented in another place. The Government would have set a dangerous precedent had they attempted to force this Bill through in the teeth of opposition from the other parties. In the Government's view, the provisions of the Bill extending the franchise to British citizens resident abroad marks a significant step forward. It could add perhaps up to half a million new electors to the register.
Baroness Elles: My Lords, is that figure based on seven years or five years? I understand that in the Government's reply to the Select Committee they gave 600,000 and 100,000: but that I think was based on seven years. Does the figure that my noble friend has given now apply to five years?
Lord Elton: Yes, my Lords. My noble friend will not have been as aware as the rest of your Lordships that, whatever the answer is, it is based on five years. I think that there are certain skills exercised at Cheltenham this afternoon that have extended themselves into the House.
Lord Mishcon: My Lords, will the Minister agree that his very worthy colleague had a hand in his reply?
Lord Elton: Indeed, my Lords. The new provisions ensure that British citizens who go to work abroad may vote in at least one parliamentary general election and one European parliamentary general election after they leave, provided of course that they have not already left, as my noble friend was at pains to point out. But the real significance of these provisions is that they establish the principle that British citizens should not be disenfranchised because they are not resident here on the qualifying date. In establishing the principle it is right that we should move cautiously, but it will always be open to a future Parliament to extend the five-year period once the new provisions have been seen to be working.
I tried to make it clear at the outset that the Government's aim has been so far as possible to secure all-party support for this Bill. The noble Lord, Lord Tordoff, has nonetheless announced his intention to try, may I say yet again, to convert your Lordships to the principle of proportional representation. I think that, while everybody can have his own view on that issue, and those views may not be divided on party lines, one thing is very clear. There is not the slightest prospect of all-party support for the introduction of

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any form of proportional representation at parliamentary, local government or European Parliament elections at the present time.
The noble Lord, Lord Allen of Abbeydale, raised the question of the voting rights of the mentally ill, as did the noble Lord, Lord Mishcon. I know that many other noble Lords have that interest very much at heart—the rights of mentally ill and mentally handicapped people whose sole place of residence is a psychiatric hospital. Your Lordships will recall that this was extensively discussed in the House in 1982 during the passage of the Mental Health (Amendment) Act. I recall exchanges with the noble Lord on this issue myself and with other noble Lords who will doubtless return to it.
The Government then responded to views expressed from various quarters by giving mental hospital patients the right to register as electors at an address outside the hospital. A great deal of satisfaction was expressed at the outcome. But I should add that the inclusion of the right to give a mental hospital as the address of the voter was mooted during the passage of the Mental Health Bill in 1982 and it did not command the necessary support to carry it into the Bill on that occasion.
The provisions introduced in that Bill and translated, as the noble Lord has reminded us, into the 1983 Act have been in force for only about a year. We shall be studying their operation with care and we by no means rule out changes in the future. This is, however, a sensitive issue. Further changes at the present time would certainly be controversial, and we feel that it is too soon to judge whether in fact the present conditions are operating satisfactorily. I thought I ought to give the noble Lord that faintly discouraging indication at this stage.
My noble friend Lady Elles brought before your Lordships the concern of European Community officials who work in the institutions of the Community and who argue that they should be given a status akin to that of Crown servants resident abroad who have a right to vote for the constituency where they would be resident if it were not for their circumstances as service voters. Successive governments have encouraged British citizens to take up posts in Community institutions, and British officials make a significant contribution to the success of our membership of the Community. The Government accept that those officials are in a special position, reflecting the uniqueness of the Community itself in international affairs. But, subject to anything which my noble friend may have to say at a later stage, we think that it would be wrong to put them in a special position as regards voting rights.
We should have preferred, as I have said before, a longer time limit than five years, but now that we have reluctantly accepted it, it is hard to see how we could justify creating an exception to it for Community officials, because to do so would cast doubt on the contribution made by many other British citizens working abroad in the private sector whose work, as my noble friend has herself pungently said, is every bit as vital to our membership of the Community as that of British citizens in the public service. Any view that she expressed would have to be sufficient to persuade not only your Lordships but another place. I see that
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she wishes to add to that in advance of the next stage, so I shall give way.
Baroness Elles: My Lords, I am grateful to my noble friend. I merely wish to recall to him that we managed to make an exception for such people in the British Nationality Act, and possibly, that would be a guidance when discussing this. But perhaps we could raise this matter during the Committee stage of the Bill.
Lord Elton: My Lords, I am grateful to my noble friend for revealing to us some of the basis of her optimism in this matter, which I cannot as yet do much to encourage.
My noble friend also would, I know, wish the Government to take the opportunity of giving all British nationals resident in the European Community the right to vote at European parliamentary elections. The present position is that Belgium, the Netherlands and the Republic of Ireland give the vote to all Community nationals who are resident in their territory. The other member states all give the right to vote to some or all of their nationals resident abroad. Before the 1984 European Parliament elections the Council of Ministers discussed proposals from the Parliament for a uniform franchise under which all Community nationals resident within the Community would have been given the right to vote by their country of origin. These proposals raise substantial difficulties for several member states and no agreement was reached.
The Government do not accept that it would be right in the absence of a Community agreement to extend the franchise for European Parliament elections to all British nationals resident in other member states. To do so would involve creating an artificial link between the elector and his United Kingdom European Parliament constituency, a constituency in which he may not have been resident for many years or, in some cases, in which he never may have resided at all. In the Government's view, it would be preferable, if other member states agree, for the Council to decide that Community nationals who live outside their own member state should be given the vote by the member state in which they reside.
Lord Broxbourne: My Lords, before my noble friend leaves that point, will he be good enough to supplement the point put to him by my noble friend Lady Elles in regard to the voting rights of officials in Community institutions and particularly officials in the European Parliament? Has he had an opportunity as yet to consider the anomaly of non-representation coupled with liability to taxation? Has he perhaps, with the assistance of the assiduous and athletic noble Baroness who sits next to him, as yet been able to familiarise himself with the protocol to which I ventured to draw attention in the speech of the noble Lord, Lord Mishcon?
Lord Elton: My Lords, neither assiduity nor athleticism can always suffice to overcome difficulties of communication. I shall either have to return to this matter at another stage, or write to my noble friend, or, more than likely, both.
We have covered a number of points to which we can return if the House wishes to do so and if the Bill

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is, as I trust it will be, given a Second Reading. We shall, of course, listen very carefully to everything that is then said. In general, however, we hope that an acceptable balance has now been struck and that on the main issue covered by the Bill your Lordships will not seek to tilt the balance too far in one direction or the other, having in mind the great difficulty of achieving it at all. I believe that this Bill is more clearly drafted than some with which we have to deal, although it legislates by reference—unavoidably, I may say—more than one would wish. I trust that your Lordships are in sympathy with its main objectives. I beg to move.
On Question, Bill read a second time and committed to a Committee of the Whole House.

European Community: Internal Market
5.11 p.m.
Lord Ezra Lord Ezra rose to ask Her Majesty's Government what success is being achieved in the establishment of an effective internal market within the European Community.
The noble Lord said: My Lords, I believe that this is an appropriate time to raise the question of the establishment of an effective internal market within the European Community. Last year much of the time of the Council within the Community was taken up with what appeared to be the intractable problems of the budget and of the common agricultural policy. A start has been made in dealing with those problems and attention has now, rightly in my opinion, been focused on the question of the internal market.
At the Fontainebleau meeting on 25th and 26th June, the Prime Minister said:
"We must now create the genuine common market in goods and services which is envisaged in the Treaty of Rome".
The subsequent nomination of the noble Lord, Lord Cockfield, as commissioner responsible for the internal market gave support to that view.
It is also noticeable that M. Delors, the new president of the European Commission has put this as one of the major objectives in his period of office. It figures prominently in the programme which the Commission has recently submitted to the European Parliament for their work for 1985. It is therein stated that full implementation of the programme for consolidation of the internal market will remain a major objective in 1985.
M. Delors has stated in a speech to the European Parliament that he hopes that by 1992 the internal market will have been successfully and fully established and all impediments removed. I was glad to note that in an article written at a subsequent date, Mr. Rifkind stated that Britain fully endorsed this objective and their only comment would be that they hoped that the date of achievement could be advanced by two years.
Therefore, what is clear is that within the Commission—certainly in the minds of the British Government, and in indeed in the minds of all other governments who have commented on this question—there is a desire to ensure that the internal market is brought into effective operation; so now is
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a good time to have a look at where that market stands at the moment and what needs to be done to achieve these desirable objectives. May I stress to your Lordships that the stakes for which we are playing in seeking to achieve this are very considerable indeed because the Community at present represents a market of 270 million persons, soon to be increased by some 35 to 40 million by the accession of Spain and Portugal and, if you add to that the associated EFTA countries, there are another 30 to 40 million. Therefore in its size, importance and sophistication it is more than equal to the other major markets in the world and particularly the competitive American market. Anything that is done to mobilise that massive market into a single unit in order to stimulate production, productivity and efficiency and thereby to lead to greater job creation, is wholly desirable.
The Treaty of Rome lays down that the objective within the Community is to create a free market for goods, people and services. So I suggest that we look at each in turn. Where do we stand in that establishment of the free market for goods? At a relatively early stage in the creation of the Community the tariffs on the movements of goods within the Community were progressively eliminated, and now of course they have been eliminated for some time, and a common external tariff was created. But an unfortunate aspect of this removal of the tariffs was the emergence of the so-called non-tariff barriers. These are the barriers of a protective nature which were established or maintained in different countries in order to continue to support and protect their own enterprises in the face of increasing competition from neighbouring Community countries by means of standards, safety regulations and other matters of that kind. Indeed, during the course of last year, a great deal of trouble was created by the difficulties at frontier stations within the Community and this is another aspect of the non-tariff barriers.
It is satisfactory to note—and no doubt the noble Lord the Minister can give us more information when he replies—that a good deal of progress is being made in this field at the present time. So far as standards are concerned, for example, the big stumbling block has been the slow pace at which European standards were created. What is now intended—and I understand according to an article in this morning's Financial Times that the noble Lord, Lord Cockfield, is fully in support of this—is that standards within each of the Community countries should apply throughout the Community so long as the safety elements in those standards are acceptable. This will make a very great difference and will lead to the elimination of what has been for a long time one of the major non-tariff barriers. The Customs formalities are being looked at with increasing vigour since the difficulties at the Italian frontier stations a year ago.
Another aspect of the need to harmonise and co-ordinate within the Community is in the field of research and development. Here, too, the first steps seem to have been successfully taken. There are such projects as the Airbus development, the Esprit programme in information technology, the Jet nuclear fusion programme, and the European Space Agency, which are illustrations of the real efforts now being made to get a European dimension in the higher technological field.
We cannot stop there. The fact is that in many ways the individual European countries are together spending more in developing their technologies than the Americans and the Japanese but getting much less for it because this expenditure is fragmented. It is therefore increasingly necessary that we extend the area in which there can be a co-ordination of research and development and quite clearly telecommunications and bio-technology play a major part in this. No doubt the Minister can tell us something about developments in that connection. Therefore, there is a great deal yet to be done to make sure that there is an effective free movement of goods. There are signs that the problems are being tackled in a practical manner.
Moving to persons, there are still impediments in the free movements of persons across frontiers. Although it has now become easier if one has a Community passport to move around within the Community countries, what still remains to be dealt with is the right of establishment, the freedom to take jobs easily in the different community countries, and above all the acceptance of professional qualifications as between one country and another. The Commission, to be fair, has made many recommendations over the years about the need to get agreement on the acceptance of professional qualifications—for example, medical qualifications. But, so far, the veto has played a large part in preventing, say, British professionally qualified persons, who so wish, from practising in France, Belgium or Germany. It is therefore necessary that further steps be taken in that direction.
When we come to services, I am afraid that the situation is somewhat worse even than in the case of the movement of goods and persons. Here, there has been relatively little progress. On insurance, for example, a Community agreed basis has not been achieved. In Germany, in particular, there are rules still applicable which prevent the free operation of insurance companies from other countries. Steps are being taken to overcome this. It has been regularly referred to, and again in this field there are proposals from the Commission.
The question of mortgages is interesting. Hitherto, it has not been possible for mortgage companies to operate in different countries. British building societies have put forward proposals to get this put right. A recommendation was made by Mr. Tugendhat, one of the outgoing commissioners, at the end of last year, to enable the mortgage arrangements applying in different countries of the Community to be acceptable in all the other countries pending the time when common mortgage arrangements could be arrived at. It seems to me that to proceed on this sort of basis, similar to the basis that we want to achieve on standards and professional qualifications, is a good way forward. I hope very much that it will have the full support of the Government.
Where there has also been very slow progress is in the free movement of capital. This is, or course, due to the fact that some countries within the Community—Britain is one of them—operate a free movement of capital into and out of their shores wheras others operate exchange controls. The free movement of capital is therefore difficult. But the
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operation of the European Monetary System, debated in your Lordship's House on a question raised by my noble friend Lord Diamond on 5th March, has limited the discrepances between the currencies of the different member countries. This is generally accepted by all who have looked at this question. The increasing emergence of the ecu as a currency in which more and more bank deposits are being made and in which more commercial transactions are taking place shows that there is a prospect, if this trend is reinforced, of stimulating the free movement of capital throughout the Community.
I should like to reiterate, as my noble friend Lord Diamond and myself did in the debate on the exchange rate mechanism, that if Britain is really serious, as I am sure the Government are, about establishing an effective internal market within the Community, one of the most important ways of doing it is to join the exchange rate mechanism and to show thereby that we are fully committed to creating this effective internal market. We would gain immeasurably, I believe, from taking that step. It is our reluctance to do that one thing that still causes doubt in the minds of our continental colleagues.
Furthermore, the City of London is regarded and rightly accepted as one of the three major finance centres of the world. How much stronger would that become if we were fully in the exchange rate mechanism system; if we fully, therefore, supported the movement to the creation of the ECU as a currency that could be built up with the full backing of Western European countries to face up to the dollar and other external major currencies!
I should like to conclude by saying that I believe that the creation of an effective internal market within the European Community is now overdue. It is encouraging to know how seriously this is now being taken particularly by our own Government. Britain has indeed much to gain from such developments, particularly in establishing a free and unfettered market for services in many of which we excel. We also need to, and will, gain undoubtedly from the co-ordination of research and development in high technology.
I believe, however, that we need to give something as well as to gain something. What we need to give is to adopt, at long last, without qualification, the exchange rate mechanism that has been of benefit to those countries that have adopted it by restricting the variations between their respective currencies. This could undoubtedly reinforce the role of our financial expertise and provide greater exchange rate stability in our most important market, namely, the West European market. Above all, it would in my opinion lessen the prospect of the re-emergence of protectionism that tends to rear its head every time economic difficulties arise.
5.27 p.m.
Lord Bethell: My Lords, one has only to walk down an ordinary British high street and look into a shop window, or to venture into an ordinary British supermarket, to realise how much has been done in establishing a true common market between our ten countries. By the same token, though, one only has to be involved in import-export within the Ten, or to be

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involved in the European institutions that monitor such movement of goods, to realise how much remains to be done. So much has been achieved and trade has expanded to such an enormous level between us that we have now reached, unfortunately, something of a bureaucratic bottleneck. This is shown by the phenomenon of trucks and railway wagons stacked up at frontiers, non-tariff barriers and problems that arise because too much is apparently being moved for customs authorities and immigration authorities to deal with.
This is why I welcome very much the short debate initiated by the noble Lord, Lord Ezra. I hope that this enormous subject that deserves perhaps more than one or two speakers on an Unstarred Question can nevertheless be tackled seriously as a matter of urgency by Her Majesty's Government. We know that the Government set great store by the implementation of a true common market. We know that they agree with the emphasis placed on this matter by President Delors in his speech to the European Parliament a few weeks ago. Ministers point out frequently the undeniable truth that we do not yet have a common market or that we have it only in certain areas and that the conspicuous gap in the Common Markt occurs in the area where this country excels—in particular, the service sector.
The Foreign and Commonwealth Secretary has pointed out again and again the need to establish freedom of trade in banking, insurance, and of course in air travel. The idea that we may have to wait until 1992 to achieve freedom in these areas is very distressing and disappointing. I want to pay a tribute here to the work done by my European parliamentrary colleague, Mr. Basil de Ferranti. I am sure my noble friend the Minister has heard of his group—called the Kangaroo Group—which draws attention to the flaws in the Common Market through publication, meetings, lobbying and careful preparation for the improvements which we hope will come soon.
Examples abound in the publications of that group of nonsenses at frontiers, quotas placed on the movement of lorries from one place to another, the absence of new technology to be used by customs officials in dealing with the forms which are being presented, and the need of some lorry drivers to present as many as 40 documents if they wish to cross a European Community frontier. This is a very far cry from the pledges of President Delors and the hopes of Her Majesty's Government. We must hope that these barriers will be overcome.
Every week Members of the European Parliament receive complaints from traders about problems caused by value added tax, by differential rates and by different rules from one country to another in the imposition and timing of the levying of VAT. All this causes important barriers to trade.
As the noble Lord, Lord Ezra, mentioned, perhaps the most disgraceful elements of all in this equation are the disguised import controls, the so-called health checks, the so-called safety checks on automobiles, the confinement of import points to one airport or seaport. All this is done not to make trade easier but to make it harder, and particularly to prevent imports of one product or another in order to protect the market. It can be done through restrictions on labelling of
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ingredients. It has been said, whether accurately or not I cannot swear, that, taking a tube of Smarties as an example, the red ones may be illegal in Italy because their safety laws prevent the use of cochineal whereas the blue ones may be illegal in Germany because the particular dye in them is not considered safe in that country. An absence of harmonisation—that dreadful word which is sometimes used in order to criticise the Community—is responsible for hold-ups and barriers which do none of us any good.
I should like therefore to put specific points to the Minister and hope that he can encourage the idea that we are making steps forward and that the 1992 date is at least realistic. Can he tell us anything about the windscreen card—the sticker that can be placed on an automobile windscreen travelling across the European Community frontiers whether on the Continent or arriving at Dover? It would permit a car with its passengers and goods to travel without let or hindrance subject only to spot checks by immigration and customs officials. I understand that this has been proposed by the Dooge committee. Can the Government say whether or not it will be accepted?
I should also like to draw attention to a red herring, a false trail which is sometimes laid in the discussion of this matter. I refer to the twin scourges of terrorism and drug abuse. Whenever we talk about dismantling immigration or customs control we naturally hear cries of protest from those who believe that it will increase the danger from terrorism and drug abuse. I should like to turn that argument on its head and say that an increase in European co-operation, and an increase in the pooling of information and intelligence through the Pompidou committee on drug abuse and through other institutions yet to be set up on terrorism, would be a positive act by the Community to stamp out those two evil activities. It is surely not beyond the wit of human invention to make our Community an extra shield against terrorism and drug abuse instead, as some people do, of using them as a pretext for saying that we cannot dismantle controls on frontiers.
I do not believe that the average terrorist or drug-pusher is particularly deterred by checks at frontiers. What we need, I suppose, if we are to stamp out those two evils, are more checks at other places: within cities or within places where the terrorists or drug pushers work. The frontier may be purely incidental to this. After all, a criminal makes very careful provision if he is crossing a frontier and the time to catch him is when he is off guard, not necessarily when he is going through a frontier well-prepared and well-armed with forgeries and ready to deal with any danger which might arise. I hope that the Government will be able to indicate what they are doing in these two areas.
I should like to turn briefly to a point raised in the previous debate: the problem of criminals from this country taking refuge in other European countries. We have problems with one member country (the Irish Republic) and in one applicant country (Spain). I believe it would be absurd if Spain were to join the Community and were at the same time to remain a place of refuge for people wanted in this country on criminal charges. There must surely be "free movement of criminals", if one may call it that, as well as free movement of goods between Community countries. If they are wanted in Britain it must be

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possible to remove them from Spain or anywhere else, and the idea of taking political asylum in another Community country must be the ultimate absurdity.
I should like to conclude by adding my voice to that of the noble Lord, Lord Ezra, who moved this debate, and others, on the question of the European Monetary System. The noble Lord, Lord Ezra, is quite right, and those of us who spend a lot of time on the Continent will fully realise that he is quite right to stress the political importance of this country joining the EMS as soon as possible. It is seen very much by our colleagues as a litmus test; an earnest of our good intent in the European Community. Sadly, not everyone on the Continent believes that we in Britain want a true European Community. Many people there believe that all we want is some sort of a free trade area and they see Britain's commitment to Europe as being something less than wholehearted. Sadly, they quote the very poor turn-out in last June's European elections as evidence of Britain's general lack of enthusiasm for and interest in the European enterprise.
I know that the Government want a true common market, true European political co-operation and closer European unity. But there is a crediblity gap, and, spending as much time on the Continent as I do, I believe that our credibility will live and flourish there if we join fully in the European Monetary System. I hope very much that we shall do so. I have emphasised the political reasons for doing so; there are, of course, financial and economic reasons as well.
If this can be done, I believe that we shall make progress over the areas which are emphasised by the Foreign and Commonwealth Secretary in drawing attention to the need for a common market in services. Britain would make tremendous gains and profits if this could be done. There are trade-offs in Europe. I believe that if we were to join the EMS there would not be a straight trade-off for the common market in services, but it would be so much easier politically for Continental leaders to concede these points and give a common market in services, which would be greatly to Britain's advantage. Therefore, I look forward very much to my noble friend's answer to these points. I know that they are being studied very carefully and in great detail by the committee under the chairmanship of the noble Baroness, Lady White, so this debate is only one of many that will take place on this vast subject. It is one of the most important areas of parliamentary concern. I look forward to what the Minister will say, and I am grateful to the noble Lord, Lord Ezra, for introducing the debate this afternoon.
5.42 p.m.
Lord Rhodes: My Lords, may I intervene very briefly without having my name down to speak. I have just returned from Australia, where I have had several weeks of discussions of all kinds. One of the main requests to me was that for information about our progress in the Common Market. I think that we are treating our old trading partners very badly. We are far too insular and far too inclined to look inwards. We should be telling our old partners precisely why we went into the Common Market and what progress we are making. I implore the Government to get the
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Central Office of Information, or whoever it may be, to disseminate this information as soon as it can possibly manage to do so.
Last year we on Sub-Committee D on the EC investigated the question of motor-cars. It was stated at that time that the EEC's new regulations were aiming at preventing car prices from differing by more than 12 per cent. from country to country. This is a prime example of how it is not a common market. I want to make a plea for the firming up of the regulations which were aimed at preventing car prices from differing since the time we debated this question last year. Motor-car manufacturers' profits and losses must not be the only criteria in assessing the benefits of competition in the EC market. Lower prices for cars would increase the real income of most households in this country, and the consequential increase in spending power would, in turn, mean more consumption and so lead on to more output and more jobs.
High prices have attracted importers to the British bonanza. Surely, whatever the exact size of British Leyland's loss, it is the height of folly to subsidise that company by rigging the whole of the British car market, and incidentally helping British Leyland's competitors more than British Leyland itself. What is happening is that practically every car the Japanese make and distribute in this country—one of the most lucrative countries in the world to sell in—represents an extra subsidy to the Japanese so that they can modernise their factories. Would it not make more sense to pay the subsidy to British Leyland out of taxation and thus enable the British consumer to get his car at a fair price? Sooner or later we shall have to do it. Why not now?
As matters stand at the moment we can expect more and more cars to be imported. Our car industry is not big enough to cope with the world's great giants any more. There will have to be a subsidy for motor-cars. Why not make it a direct subsidy? That is all I wish to say. This debate has given me an opportunity to get this off my chest. I have spent a lot of time on it in the sub-committee upstairs. I should like to know what progress has been made towards making a better common market for motor-cars. Sooner or later we shall have to do it, and it might as well be now.
5.46 p.m.
Lord Barnett: My Lords, I, too, should like to congratulate the noble Lord, Lord Ezra, on raising this most important topic. I am glad that my noble friend Lord Rhodes was able to give us a few words, using his own long experience in industry and trade. I want to make it quite clear that I am only too well aware of the problems that Ministers have in making progress in this area. Anybody who has attended Council of Ministers' meetings would not wish to criticise a fellow Minister, or a successor Minister, for not having made progress. In those days it was not even 10 Ministers. I am very much aware of the problems, and I do not want to say to the Minister or the Government that they are to be seriously criticised because we have not got a fully integrated market at the present time. The noble Lord, Lord Bethell, talked about bureaucratic bottlenecks. I wish they were only bureaucratic, but I fear it goes rather deeper than that, as I am sure he will

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agree. Indeed, he gave examples where the problem clearly goes much deeper and goes, unfortunately and sadly, to the root of political decisions made in member countries.
I must say it has been a pleasure that in this brief debate we have got away from the sterile arguments we sometimes have when we debate the Common Market, whether one is pro-market or anti-market. I see that the last time this matter was debated in this House, on 13th December 1982, my old and trusted noble friend who years back served (if that is the right word) with me in the Treasury was once again seeking to blame the Community for most, if not all, of our industrial problems; although I am happy to say that on that occasion even he was willing to recognise—I quote him—that:
"the EEC can hardly be held responsible for our present troubles any more than can the world recession, which is another favourite excuse of Ministers".—[Official Report, 13/12/82; col. 423.]
So even my noble friend Lord Kaldor, on that occasion, having quoted some of the figures of trade between 1973 and 1981, was willing to recognise that the problems are not ones relating to making the case for or against our membership of the Community. The fact is we are members, and I would hope that all of us would want to see it work as well as possible, not only in Britain's best interests but in the interests of all the people of the Community, particularly workers in the Community and in our own country who are now unemployed but who would not be unemployed if we had a more integrated market.
Having said that, I should like to say that it is obvious, as the noble Lord, Lord Ezra, said—the noble Lord, Lord Bethell, also made the point very clearly—that we do not have a fully integrated market. Both noble Lords gave examples of the lack of progress. In view of the lateness of the hour I shall not mention some of those I had in mind, because I should only be repeating the points they made. I know that the noble Lord, Lord Ezra, will understand if I do not repeat them. I think the major case was made very well in the report of our own Select Committee in the Session 1981–82—the seventeenth report.
The part to which I was particularly attracted is contained in paragraph 66. There the committee said:
"The main common feature of all the various types of barriers to free trade in the internal market of the EEC is uncertainty".
Anyone who has had anything to do with trying to export to the Community—and I have had a little experience and know of many others who have had greater experience—will know that one of the main reasons companies decide not to bother any more in the case of some countries is the certainty that they will have great difficulties in getting through the barriers that are put up against them. It is that certainty, and the uncertainty in other cases when companies know that so many problems will be put in their way and so many barriers of one kind or another will be erected against them, that makes traders in this country say "What the devil, I might as well look elsewhere".
I do not wish to take up the points made by the noble Lords, Lord Ezra and Lord Bethell, about the EMS and the exchange rate mechanism. I think that I have upset my own party enough for one week and so I shall not repeat my arguments on that front—they
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are well known. The noble Lord, Lord Bethell, said that there is a lack of credibility as regards Britain among member states of the Community. I do not think that we need to be too defensive about that because there are many member states other than Britain who put up real, practical barriers of the kind to which the noble Lord referred. When those member states criticise us for not wishing to be in the EMS—and in my view it is wrong that we are not in the EMS—we have a good reply for them. We can say that they, too, should learn to be purely communautaire in their actions, rather than use words in relation to the barrier which they actively support in their own countries to prevent a truly free trade across borders.
One of the useful comments that I noticed from the last time that we debated this subject on 13th December 1982 was that the noble Lord, Lord Cockfield—who, incidentally, should now be in a position to do something about this, always assuming that the Council of Ministers will enable him to do so—said, when referring to the 17th Report of the Committee of this House, that he was hoping to see real progress before the end of March 1983. I suppose that as Minister one has to be reasonably optimistic. However, that is perhaps stretching matters a bit; it is now two years later, and there is still much progress to be made.
Ever since that debate we have been told in successive Answers to Questions both in this House and in the other place that, to use the phrase used by the Minister of State Mr. Channon in another place in December 1984, "We shall continue to press", and again in February 1985, "We hope to see this or that in operation very soon". I hope that tonight the Minister will give us some concrete examples as to where some of this progress is in operation now.
In your Lordships' House we should also be aware that not only Ministers and politicians are at fault for the lack of progress in removing barriers to trade, goods, services and people. My own profession, the accountancy profession, and many other professions will find many reasons to put barriers in the way of preventing freedom of movement across frontiers. There are many in industry who complain bitterly about the problems that arise from the barriers that are imposed, who will also bring pressure to bear on Ministers and politicians not to be too quick to remove barriers because they would regard that as damaging their particular industry. Therefore, it is not only politicians and Members of this House who should be taking all the blame; there is plenty of blame to be attached to others, too.
When the Minister replies perhaps he will give us his own realistic assessment as to when he sees some of the specific barriers to which reference has already been made this evening being removed. Above all, perhaps he will give us some indication as to how soon the Council of Ministers—because at the end of the day it is the Council of Ministers rather than the Commission which will have to take the real decision—would hope to see a realistic end at least to some of the uncertainties, so as to enable us to move more freely into the area of true integration in trade, services and persons, which would do so much to help us in Britain, particularly in the field of employment.
5.55 p.m.
Lord Brabazon of Tara: My Lords, first, I must apologise for the absence of my noble friend Lord Lucas of Chilworth, who otherwise would of course have been answering this Unstarred Question. My noble friend is away in Germany and Switzerland promoting trade and inward investment, and I am sure that all noble Lords will hope that he is successful.
We are all grateful to the noble Lord, Lord Ezra, for raising this important question. As the noble Lord said, the time is most opportune. Negotiations are being completed for the entry of two more democracies, Spain and Portugal, into the Community, which will increase the Community's size to 320 million people—a very powerful market base for industry. We also have in Brussels a new Commission who have made it clear that the completion of the common market in both goods and services is their top priority.
It is a priority which the Government share. Behind the Community's common external tariff wall is a single market which offers industry a basis to develop its international competitiveness, and which offers the consumer a much greater breadth of choice. The Common Market is much more than just a free trade area, and I should like to touch further on that theme in a few minutes. But I shall first briefly cover our trading performance and prospects in the Community.
Our deficit with the rest of the Community in manufactured goods has come in for a considerable amount of comment recently. Although our deficit on visible trade was offset by a roughly similar surplus on oil, it certainly points to the scope that exists for increasing our exports of goods to the rest of the Community. And there is, indeed, encouraging evidence that British exporters' attitudes towards the wider Community market are changing. United Kingdom exports to the rest of the Community began to rise strongly towards the end of last year—and that was happening before the recent fall in the exchange rate, which should give a further edge to our price competitiveness in most European markets.
These markets are of course of increasing importance to United Kingdom exporters; 39 per cent. of United Kingdom exports of manufactures now go to Community countries compared with 29 per cent. in 1970. Despite this very considerable realignment of our trade towards the Community, the common market can seem very far from being just an extention of the domestic market.
Part of the problem is that of catering for different consumer preferences and in different languages. Those are the facts of business life which United Kingdom industry has to master in order to sell in Europe. I do not believe that if you build a better mousetrap, the world will beat a path to your door. Industry itself has to get out and sell it in terms that make sense to the consumer. Government can only set the right business framework.
In terms of this framework, doing business in the Community internal market is less straightforward than it should be. Differing national standards and regulations, form-filling, transport permits and frontier delays all add to industry's paperwork and costs. Surprisingly little of this is protectionist in
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intent. It is largely the accretion of decades of national administrations collecting taxes, trade statistics or MCAs, or responding to legitimate preoccupations about the safety and health of employees and consumers, in their own way. It may produce a system which suits each national administration, but can make life much more difficult than is necessary. Your Lordships' Select Committee on the European Communities produced in 1982 a most helpful and sober assessment of these detailed barriers to the internal markets and so I shall not detain your Lordships further with the problem.
In terms of a solution considerable progress has been made over the last two years. Heads of Government in December 1982 set the Council of Ministers a number of tasks on the internal market. I am pleased to say that most of these tasks have now been discharged and the results, starting to come on stream this year, should be seen in terms of reduced goods delays at borders, simpler and less paperwork for traders and much fewer of the sudden changes in national regulations which can be so disruptive to exporters. All of these are welcome assistance to industry and free of the annoyance of "harmonisation for its own sake".
That is by no means the end of the task, however. Noble Lords will know well the imaginative and forceful character of the noble Lord, Lord Cockfield, the new commissioner for the internal market. He has made an energetic start. At their February meeting, the Council of Ministers considered a Commission proposal for a much faster and more effective means of removing barriers to trade caused by differing national regulations or standards, as the noble Lord, Lord Ezra pointed out. It rests on the simple premise—embodied in the European Court's Cassis de Dijon judgment—that other things being equal if a product is safely marketed in the United Kingdom its exporters should be able to market it without further ado in Germany, France or wherever. And vice versa. In other words, that there is much less difference in member states' objectives for health and safety than the differences in techical solutions to these objectives would appear to suggest. Of course, if national standards are in principle to be equally valid there need to be safegurds to ensure that the level of protection for consumers and employees is not undermined. The United Kingdom has worked closely with the Commission in developing the detail of this initiative and strongly supports its general direction. The new Commission are also giving high priority to liberalising trade in services in the community which, again, we fully support.
Our objective is to see the City of London as a major financial centre in an increasingly integrated market, enjoying so far as possible freedom to provide services throughout the Community without needing to establish abroad. The Community market in financial services is at present far from free. The rights of establishment and particularly of services are extensively nullified by national regulations, and the free movement of capital is restricted by national exchange controls. I do not underestimate the real problems here in reconciling member states' differing approaches to the regulation of financial and other services; and the legitimate preoccupation with protecting the investor has to be taken very fully into

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account. But the obstacles to a free market in goods must have seemed just as daunting in 1957; so the challenge is not an impossible one.
The Government will continue to press for a liberal market in non-life insurance, unit and investment trusts and accountancy services. We shall look sympathetically at proposals—as a modest first step—to liberalise non-frontier housing finance in the Community. We have recently received a proposal from the Commission for a directive on freedom of establishment and services in the field of mortgage credit, which the noble Lord, Lord Ezra, mentioned.
I do not want to prejudice the consideration which a sub-committee of your Lordships' Select Committee on the European Communities is currently giving to these proposals, but I hope that we can match the positive interest in cross-frontier business being shown by the building society movement with the Government's strong support for internal market measures which will bring competition and practical help for the ordinary citizen. I hope that we shall be able to work out a good directive on this subject.
We shall press the Commission for increased vigilance on the severity and duration of national exchange controls. There have been some encouraging signs, albeit minor as yet, towards a relaxation of exchange controls in some member states—and we of course have played our part in full—and of moves towards a more integrated capital market for industry with the rapid growth of the Eurobond market and the private sector's lead in developing further the role of the ECU.
Our support for the concept of the free movement of goods, services and capital also extends of course to free movement among the professions. A number of Community directives have already been adopted to ease freedom of movement in jobs and professions. In the medical field for example there are directives permitting suitably qualified doctors, dentists and nurses to practise in all member states. These recognise the key importance of maintaining standards of training which guarantee the preservation of member states' qualities of health care. Subject to the same general proviso that professional standards must be maintained, the Government would like to see continued progress in Community work on the rights of establishment for the professions; for example, through agreement on suitable directives on accountants, pharmacists, architects and engineers. Our own professional standards in these and other fields are a matter for pride, and our professions should benefit to the full from the Community internal market.
I should not like to mislead your Lordships' House that the creation of a genuine internal market is simply a matter of completing unfinished business. In democractic societies there will always be fresh pre-occupations to which governments have to pay heed. The Community faces such an issue at present with the very real environmental and political problem faced by German criticism about damage to her forests. Part of her response is to require the introduction of American emission technology on cars. That risks
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erecting a new and potent trade barrier to an already hard-pressed European motor industry in requiring a separate production run for the German market.
The Community is urgently engaged in finding a common solution which gives a radical environmental improvement but one which makes sense in terms of European technological development, is effective in its use of Community resources and does not harm the international competitiveness of a key European industry. For international competitiveness is what the internal market is about—free competition as a spur to the increased efficiency which we need in today's harsh world, and free opportunity for industrial co-operation.
In the industries of the future particularly, European firms are at some risk of being overtaken by American and Japanese multinationals. That is why the Government have strongly supported efforts in the Community to give a cost-effective pump-priming stimulus to common research effort as the noble Lord, Lord Ezra, mentioned—and the ESPRIT programme is a good example—and to establish common industrial standards for information technology, telecommunications and robotics. These prevent wasteful duplication of research effort, and to enable European firms to match their area of specialist expertise to create a broadly based set of products to compete with Japan and America. This is important too for users of these products. General Motors in America has shown what can be done to improve efficiency by linking "islands of automation" in their factories. European users cannot afford to miss this chance, either.
My Lords, the Government attach the highest importance to ensuring that industry keeps to the forefront of technical developments. The challenges presented by the new technologies are now so great, the pace of development so fast, and the cost of research so high that no one country can be expected to face them alone. The Community therefore plays an important role in supplementing national R & D efforts by providing a framework in which member states' resources can be pooled together. For this reason the agreement reached by the Research Council held on 19th December 1984 to commit a further 1,225 million ecu—approximately —736 million—towards Community R & D activities for the next four or five years is to be welcomed.
The research council also succeeded in agreeing a number of important new programmes—radiation protection, radioactive waste management, fusion, biotechnology, the stimulation of S & T interchange, basic research in industrial technologies, third non-nuclear energy, reactor safety, and European strategic research and development programme in international technology, which I have already mentioned.
Those accord with our perception of Community R & D in that it should be in appropriate areas and be cost-effective. In general, United Kingdom priorities for future Community R & D remain as research aimed at the efficient management of energy resources and enhancement of the Community's industrial competitiveness, of which the Esprit programme is an excellent example.

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The noble Lord, Lord Ezra, my noble friend Lord Bethell, and the noble Lord, Lord Barnett, mentioned the European monetary system. This is the first time that I have spoken on the European monetary system, but I suspect that noble Lords will probably have heard before the answer I am going to give. The Government accept that EMS has contributed to exchange rate stability in Europe and furthered European integration. It is said that the United Kingdom will join the exchange rate mechanism when conditions are right. However, while the oil market remains volatile sterling may be subject to special pressures which would make our participation difficult.
My noble friend Lord Bethell mentioned air transport. We all recognise the efforts which the noble Lord has made to give people better and cheaper air services in Europe. The Government are doing all they can. We have secured new liberal arrangements with the Dutch and Germans, and we are pressing all our European partners to do likewise. Progress in the Community has been poor, but the Council has committed itself to adopting a first group of measures on fares, capacity controls, and competition policy by the end of this year. We shall do everything possible to ensure that this deadline is kept. Air transport is an essential aspect of the Common Market.
My noble friend also mentioned the green sticker system used in France and Germany for motor cars. That system only applies to passenger traffic at land borders and not to goods vehicles, which suffer the most serious frontier delays. Nonetheless, we shall be following the green sticker experiment with interest to see if any useful lessons can be drawn for United Kingdom port procedures.
I was also interested in the comments of the noble Lord, Lord Rhodes, on the Commission's recent regulations for motor vehicle distribution. In the case of motor vehicles, selective distribution can clearly bring benefit to consumers as well as to manufacturers and dealers. The block exemption, which gives greater legal certainty to the parties concerned than a case by case approach, is therefore to be welcomed, but the Government could not accept a situation in which the selection of dealers and the acceptance of territorial or other restrictions by both the dealer and manufacturer resulted in partitioning of the Community market. That would be wholly inconsistent with the objective of a genuine common market. The safeguards in the Commission's regulations are therefore an essential part of the package and the Government will be watching with close interest to see how the Commission applies them in practice.
We have had a most interesting and useful debate. I hope I have managed to answer as many as possible of the questions that were raised. I will read most carefully what has been said and if there are any questions which I have not answered I will endeavour to write to noble Lords.
House adjourned at twelve minutes past six o'clock.

  BROADMOOR PATIENT: TREATMENT OF HEART CONDITION
  BROADMOOR PATIENT: TREATMENT OF HEART CONDITION
  COUNCIL OF AGRICULTURE MINISTERS
  COUNCIL OF AGRICULTURE MINISTERS